Lines Companies Line Up Against Consumer Protection Regulations

Lines company opposition to price regulation is predictable, given their monopolistic positions, Enterprise and Commerce Minister Max Bradford said today.

Mr Bradford was commenting after the Electricity Networks Association attacked the Government's plan to regulate to stop lines companies grabbing profits at the expense of consumers.

The Association said regulation was unwarranted.

It cited two lines companies, Vector in Auckland and Orion in Christchurch, which have promised to hold their prices for between one and three years. Mr Bradford has repeatedly criticised the failure of some lines companies to pass on lower costs, resulting in consumers paying more for their power. Mr Bradford said today the Association seemed to have overlooked recent statements by a number of lines companies, including Orion, making it clear the companies were prepared to operate within a regulatory framework. "The Association compares Vector and Orion as though they made the same quality decision.

"Vector has reduced its prices by 10% to reflect the fact that it sold its metering and billing business. This price reduction has been passed on to consumers.

"On the other hand Orion, which grandly announced a freezing of its prices last week, refused to pass on these lower costs to their consumers, kept the revenue for themselves and made a clear statement that they intended to increase their rate of profitability.

"It is therefore hardly surprising that Orion announced a record profit of $30 million, well above even the company's own forecasts. "In addition, the Marlborough Lines company has recently increased its lines charges by 41%,"Mr Bradford said.

Mr Bradford said Association chairman Mr Ken Forrest, who was also chief executive of Marlborough Lines, should exercise some caution in what he said.

"His own company is a perfect example of a company taking advantage of its monopoly position.

"I know this as a customer because in the last 12 years Marlborough Electric has increased their line charges by 466.5%, which is ten times the rate of inflation," Mr Bradford said.