Friday, November 12, 2010

Lines Companies and Power Costs

My mother told me once that the Power companies raise their prices two time a year, in April, and September, like clockwork.
Now I will be the first to admit that my mother isn't infallible, but when I worked with a power company they did raise their prices regularly.  Everybody got a price rise at least once a year.
Most people got a price rise twice a year.

The reason for these two price rises is to do with lines companies.

When the electricity market was deregulated, privatized, and split up in 1987 the government of the time made it illegal to be involved in the transmission AND sale of electricity at the same time.
In other words you could either transport electricity, or you could sell it, you could not do both.
The reasoning behind this was to prevent local monopolies.  These were areas where there was only one person transmitting the electricity, and the same person was setting the price.  It was felt that this would lead to prices that were too high.

However what happened is that each area only had one lines company.  Over time these companies amalgated and purchased each other out.  There are now 24 lines companies, and this is a good map showing their areas.  Some of these like WEL are owned by trusts and put their profit back into the community.  Some, like Powerco, are owned by overseas companies and managed for a (healthy) profit.

In almost all areas of New Zealand, the lines companies bill the power companies who include these charges in your electricity invoice.  Each lines company is a monopoly in its own area.  And every year they put their prices up.  Without fail.  They are a local monopoly, and the ones out for a profit know this and keep raising their prices.  Switching Power Companies will not help you, every Power Company will pass this increase in price onto the consumers.  And the lines company will increase the price for every Power Company.

It isn't fair but it is one of the reasons why Power keeps going up and up and up.  And there is very little you can do to stop this.
We recommend purchasing a Power Panda, save 20-30% on every power bill, and pay the blighters less.
Or you can just keep on paying high power bills, it's your choice.

Tomorrow we'll talk about some of the other reasons prices just go up.

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