Mercury Energy boss says residential power price increases will be ‘at or under CPI’ inflation in the year ahead as the state-controlled generator and retailer looks to pass through its transmission and distribution pricing

The chief executive of state-controlled energy supplier Mercury Energy says residential power price increases won’t outpace the rate of annual inflation over the next year.

During an analyst call on Tuesday over the power generator and retailer’s annual financial results, Mercury chief executive Stew Hamilton and chief financial officer Richard Hopkins were asked about plans for residential power pricing in the June 2027 financial year.

Hamilton said Mercury will consider what new residential pricing should look like as the company heads towards its half-year results for that period, which the company won’t report until February 2027. 

According to Hamilton, new residential power prices will be based on transmission and distribution pricing, which involves the shipping costs of moving electricity from power stations across the country through the national grid and local lines to homes.

“So our principle is to largely pass that through,” he said. “From an energy component, we’re typically seeing and thinking about a price rise which is less than CPI.”

The Consumers price index (CPI) is New Zealand's official measure of household inflation. Annual inflation rose to 4.1% in the June quarter, marking the highest rate of annual inflation NZ has experienced since the CPI hit 4.7% in December 2023. 

The latest CPI data found electricity prices rose 4.4% on a quarterly basis and were up 12.0% annually in the June quarter.

Hamilton said as wholesale electricity prices come down, Mercury will “continue to build that into our thinking around what the residential prices will be.”

“But it’s more of a smooth effect,” he said.

“So we expect that over the next few years, price rises will be at or under CPI, but we’ll still continue to pass through the lines of distribution costs.”

Electricity prices currently way ahead of inflation

NZ power prices in 2025 and the first half of 2026 outpaced the annual inflation rate, according to the Electricity Authority, an independent Crown entity responsible for regulating NZ’s electricity market.

Through new information provided by electricity retailers, the Electricity Authority reported last week that power prices for all households and small businesses increased by 6.8% on average in the first half of 2026. This follows an increase of 8.0% in 2025.

The Electricity Authority said about 22% of households and 34% of small businesses experienced no change in power prices between 1 November 2025 and 30 June 2026. 

For those who did experience a price change, household power bills jumped by 8.7%, while small business power bills increased 7.2%.

Data from the Electricity Authority shows Mercury is New Zealand’s largest power provider by retail market share.  

The company is a state-controlled power generator and retailer (gentailer). The Government holds a legislated 51% majority shareholding in Mercury, Meridian Energy and Genesis Energy. Mercury, Meridian and Genesis are three of the four largest gentailers, along with Contact Energy. Contact has no government shareholding but is one of the country’s largest listed companies on the NZX.

Mercury reported $321 million in annual net profit after tax for the June year. This was a $320 million increase from the 2025 financial year, which was affected by challenging financial, hydro and gas conditions.

Mercury’s total operating earnings for the latest financial period jumped to $1.068 billion, up 36%, or $282 million, compared to the previous period.