Others may follow Contact's lead in price hike
Tuesday September 26, 2006
By Anne Beston

A price hike by Contact Energy could be followed by other companies as the country's demand for electricity shows no sign of abating. Contact customers in Wellington, North Canterbury, West Auckland and the North Shore face price rises of 8 per cent for electricity and gas, although the company won't say how many households will be affected from October 1. Contact has more than 600,000 customers and "only a fraction will be affected", says spokesman Jonathan Hill.

Once Government-owned and now one of the country's largest listed companies, Contact is blaming dwindling gas supplies from the Maui field and the cost of developing new fields for the price rise.

"Electricity demand continues to grow, Maui is running down and the price of gas has doubled in the past five years," Mr Hill said. "Supply is getting tighter at the same time demand is growing. With strong economic growth, demand just continues to rise."

Consumers' Institute chief executive David Russell advised householders to shop around. "All we can do is encourage people to check they are on the most appropriate power plan and with the cheapest company," he said. "If they are with Contact and there is a cheaper option, shift to it. It's the only way the companies will get the message."

Mr Russell said with a 14 per cent increase in earnings in the past financial year and a reported profit of $280 million, Contact appeared to be "doing very nicely" and 8 per cent was twice the rate of inflation.

Genesis Energy spokesman Richard Gordon said his company had a "rolling programme of price changes" for different market sectors and did not rule out increases. "We are the largest retailer of electricity and gas so it would be no surprise if Contact is pushing prices up then companies like us or Meridian have similar plans," he said. "It's a simple supply and demand situation."

Contact is a major player in the electricity market and is 51 per cent owned by Australia's Origin Energy. It owns geothermal fields in Wairakei, the Clyde and Roxburgh dams, combined cycle gas turbines in Taranaki and Otahuhu and a co-generation plant in the Waikato.

Contact listed on the Australasian sharemarkets in 1999 at $3.10 a share and closed 6c up at $6.88 here yesterday.

Check for price comparisons between suppliers here .