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Contact defends ETS pricing decision

Wednesday 30th June 2010

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Contact Energy today rejected "any implication that we are using the emissions trading scheme to cover for inflating prices".

"We are not," said managing director David Baldwin, in a statement that follows Prime Minister John Key's singling out Contact over ETS-related price rises this week, and a Commerce Commission warning this morning that companies blaming unrelated price rises on ETS or GST increases could face action under the Fair Trading Act.

Only Contact and MightyRiverPower's retail arm, Mercury Energy, have said they are raising prices to account for the impact of the ETS, prompting Key to observe that the power company most affected by the ETS is Genesis Energy, which burns coal at the Huntly power station. Genesis has said it will not change its pricing because of the ETS.

Contact says the ETS will raise tariffs by 3.2%, "very much in line with the government's estimate of ETS adding 5% to the cost of electricity."

The company faced criticism from Key and Energy Minister Gerry Brownlee over claims that its tariffs were increasing between 10% and 17% for customers in Dunedin, whose power prices had not changed since November 2008.

However, the average price rise for Dunedin customers is only 6%, Contact says, and this includes the ETS component.

"The reason for the bulk of the increase in Dunedin is not related to the ETS, but reflects increasing costs ... of generating electricity, building new power stations, purchasing gas, (and) providing retail services," Contact told BusinessWire.

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