Photo: Vector / Brett Phibb
The Electricity Authority and the country's biggest lines company are at loggerheads over who will take on the cost for new connections to the electricity network.
The Authority is consulting on its proposal to introduce new market rules on power connections.
It says the plan will make it easier for businesses and consumers to connect to the distribution network, and result in consistent sector pricing by controlling how much lines companies can charge businesses to connect
Auckland lines company Vector posted on Facebook on Monday claiming the proposal would mean household consumers would pay part of the cost of all new network connections.
But the regulator's network pricing director Tim Sparks said Vector is wrong.
"They are arguing that households would be subsidising businesses, that effectively businesses wouldn't be paying their fair share and households would be paying it instead. That's incorrect," he said.
"Organisations connecting to the network will pay all their own connection costs through a combination of upfront and ongoing charges. So, it's just not correct that households would be subsidising businesses under our proposals."
Sparks also noted Vector earns more from such connection charges than other lines companies and is also proposing to increase its charges.
But Vector said the proposal includes a cap on how much lines companies can charge up front for a business to connect.
Chief public policy and regulatory officer Mark Toner said that cap will force any extra cost on to the average, household consumer.
"We currently charge 100 percent, the full cost of a new connection. The EA's proposal is to cap us at only charging 82 percent and that's different across different EDBs (electricity distribution businesses).
"But to the extent that we are capped below 100, the delta is always going to be picked up by every existing customer."
He said Auckland has experienced phenomenal growth over the last decade, which is why Vector now ensures businesses pay the full connection cost up front.
"We've certainly moved to that 100 percent upfront contribution to protect our existing customer base from cross subsidising the cost of new connections."
The Authority said high connection charges are a financial barrier for businesses, which is why it thinks a cap on charges is appropriate.
"It's true that households will pay 71 cents a month extra initially, but they will actually pay less over time... That's because under our proposals we're going to have more businesses able to connect to the network and so the fixed cost of the network will be spread over a larger number of connecting customers and that means everyone's costs will go down over time.
"It's really quite misleading to focus on that inital 71 cents and to ignore the real benefits that will come later," Sparks said.
Vector will submit feedback on the Authority's proposal before the the Friday 20 December deadline.