Hodgson yesterday said he would be regulating the fixed charge tariff component of power prices from October, while also releasing proposed costs for the Electricity Commission's expanded responsibilities as allowed under the Electricity and Gas Industries Bill.

He said he had been concerned about the impact of rising power prices on low income groups for some time and decided to make the low fixed charge tariff compulsory. "Some companies have been playing games around offering such an option."

However, politicians and energy company bosses have slammed his power price fiddling and “socialist policies”.

Hodgson said work on this regulatory aspect pre-dated the latest round of New Zealand power company price rises announced recently and followed recent calls for intervention from the Consumers' Institute and other bodies. "I instructed officials to draft regulation on this issue some months ago. It will compel all electricity retailers to offer a tariff, the fixed charges portion of which cannot exceed 30 cents per day, excluding GST.

“This tariff is designed to make those consumers that use less than the average 8000 kWh of power a year better off. In particular, it is designed to help older New Zealanders on fixed incomes who are typically frugal users of power."

Consumers who are slightly above or below 8000 units from one year to the next will have a choice of the 30c-a-day option or a standard tariff.

However, Mighty River Power chief executive Doug Heffernan slammed the government move as bad policy, with today’s Dominion Post reporting Heffernan as saying the low fixed-charge option is "a blunt instrument" in achieving the government's social policy goals.

Some small electricity users such as a young, double-income couple could be relatively wealthy and not need the low fixed-charge option, while big power users such as poorer big families would not benefit, Heffernan said.

National energy spokesman Roger Sowry said the Electricity Commission was designed to allow Hodgson to regulate - “and we are going to see a lot more of this."

Max Bradford, the former National minister who deregulated the electricity market, said Hodgson's intervention was a "typical socialist trick", while ACT energy spokesman Ken Shirley described said the move as “another step down that slippery slope to a command economy".

Hodgson said that this year, households would each pay around NZ$18.20 for the commission's work and reserve generation, compared to last year’s estimated NZ$9.45. The commission’s budget for the coming year is NZ$2.5 million, around 55 cents per household, ramping up to NZ$11 million by 2006-07.