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Calls for investigation into surge in wholesale power prices

Radio New Zealand logo Radio New Zealand 9/11/2018

Power bill. © Getty Power bill. Four power retailers have lodged a complaint with the Electricity Authority over the recent surge in wholesale prices.

Vocus, Flick, Pulse and Electric Kiwi want the Authority to investigate the spike in prices over the past month, which have hit as high as $1,000 a megawatt hour, and are averaging three times the normal wholesale level for this time of year.

The quartet, which have close to 150,000 customers between them, are blaming the big power companies - Genesis, Contact, Mercury, Meridian, and Trustpower - with manipulating the market and forcing prices higher.

"Essentially the big retailers have been ripping off Kiwi families for decades and will continue to unless they are made to change their practices," Vocus head of regulatory and commercial, Johnathan Eele, said.

"We and other smaller players have worked hard to drive competition in the market, while the gentailers continue to make massive profits thanks to questionable spot market pricing."

The high wholesale prices have been blamed on low hydro-lake levels and reduced gas supplies, which has forced the use of expensive thermal generation from the Huntly station.

The Electricity Authority is obliged to investigate the price complaint and whether there is an 'Undesirable Trading Situation'.

It has the power to intervene and set prices and regulate trading if it finds the complaints are justified.

However, in October the Authority said no players in the industry were behaving badly.

Flick Electric chief executive Steve O'Connor said the power market needs fixing urgently.

"This situation is not about 'business as usual', it is about opportunism driven by a lack of well-supported competition - opportunism that has already seen three independent retailers exit the market," he said.

"When the market falls apart, it means it's incredibly challenging for us to buy energy at reasonable prices and sell it to our customers and compete.

Mr O'Connor said the prices are remarkably high and partly attributable to coordinated exercise of market power by the "big guys".

"We've effectively lost confidence in the wholesale market.

"If the independent retailers are unable to stay in market, we have a fundamental problem and consumers will suffer as a result."

Small retailers offering power at wholesale prices have stopped taking customers and have advised existing consumers to find new suppliers or switch to fixed-price contracts.

The Electricity Authority declined to be interviewed but said a statement would be released later today.

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