In a move that is being backed by Energy Minister Simeon Brown, the Electricity Authority Te Mana Hiko is asking power companies for more information about higher power prices and whether households could expect more increases ahead of winter.
The Authority says most households are facing average increases of around 8% to their power bills going into winter, on top of last year’s 8% increase.
“On average, if your monthly power bill was $200, this latest increase could add another $16 a month. That’s a big difference to most households when many people are already stretched,” the Authority’s general manager of its retail and consumer group, Andrew Millar, says.
It was expected households would see an increase in their electricity bills from April 1 due to rising distribution and transmission costs, which make up just over 30% of the average power bill.
“We know lines charges are increasing this year,” Millar says. “That part of your power bill is regulated by the Commerce Commission, and accounts for around one-half to two-thirds of these increases.”
“[What] we want to know more about is what else may be pushing prices up. This is why we’ve formally asked power companies with more than 1% market share for more information to explain what’s going on,” Millar says.
The Electricity Authority is an independent Crown entity tasked with governing the electricity market. However, it doesn’t set power prices, but says the impacts and causes of higher prices are central to its work.
“From October, we're requiring large power companies to offer a pricing plan that gives consumers cheaper rates for off-peak electricity. Later in the year, all power companies will be required to make their power bills clearer and easier to understand, and regularly check their customers are on the best plan they offer," Millar says.
“We’re using the levers we have to promote competition, encourage investment in new generation and create efficiencies in the system. All of these things aim to strengthen the electricity system and bring prices down in the long run.”
Energy Minister Simeon Brown says price rises need to be justified.
"New Zealanders have seen their power prices increase significantly, and those prices need to be justified, and that’s what the Electricity Authority is doing," says Brown.
When asked if the Electricity Authority had reached out to him for his views before pushing power companies for more information, Brown says they’re an independent organisation. What they're doing is asking the hard questions, he says.
Brown says the Government has set out very clear expectations that affordability is a top priority when it comes to energy prices.
No single power price increase
Electricity prices saw an annual increase of 12.5%, according to Statistics New Zealand’s consumers price index (CPI) data drop last week. Electricity prices have been the largest contributor to the annual inflation rate for three quarters in a row.
Most of this year’s electricity price increases show wide variation across the country and by retailers, ranging from 1% to 11%, according to the Electricity Authority.
Consumer advocacy organisation, Consumer NZ, has also seen variation ranging from around 4% to 12% after analysing 936 of the most common electricity plan types across 14 retailers and multiple pricing regions.
Paul Fuge, manager of power price comparison website Powerswitch which is backed by Consumer NZ, says: "In the Far North we found annual cost increases in the range of $140 to $420. While in Wellington, the same household can expect an annual increase of $102 - $305.”
“There is no single ‘power price increase’. Our analysis of the Powerswitch pricing data reveals very different impacts for similar household types across the country with many people unknowingly paying much more than they need to.”
“Headline averages hide what really matters, which is what happens on your own power bill. And the differences between plans and regions are far bigger than most people realise,” Fuge says.
'The same pressures'
A spokesperson for the Electricity Retailers' and Generators' Association of New Zealand, whose members include Contact, Genesis, Mercury, Meridian and Nova Energy, says higher prices are driven by a range of factors.
"Electricity generator-retailers face the same pressures being felt throughout the economy, with inflation being a major contributor to power price increases over the last 10 years."
"We acknowledge higher electricity prices can put pressure on homes and businesses, just as other household costs are increasing also," the spokesperson says.
"Our members have significant consumer support in place, and anyone who cannot afford to pay their electricity bills should speak to their electricity retailer as soon as possible."
"Our members are investing billions of dollars into new generation projects to ensure a strong, secure supply of accessible electricity for New Zealanders. This level of investment is only possible with strong balance sheets," the spokesperson says.
14 Comments
There is something odd going on. I believe this is a stalling tactic by Minister Simeon Brown to show he is taking an interest a few months out before the election. A few months ago Shane Jones was also shouting the odds about the gentailers. More rhetoric than the ability to do anything. All these companies publish annual accounts and it wouldn't take too long to analyse a sample, say two big ones, Meridian and Genesis over at least three years and even going out to five years. This would be quite revealing in the hands of an accountant with some knowledge of how the gentailers tick. 14 years ago a person under the pseudonym, Chalkie, analysed some lines company accounts and found them lacking. The opening statement to the article is priceless "OPINION: If you gather some youthful blokes in a flat and give them some beer, they will probably develop an enthusiasm for pointless projects."
Go woke, go broke. Building low power density, intermittent solar panels and windmills in remote locations and connecting them to the gird isn't cheap.
Willis - "In terms of electricity, that reflects regulated price increases, particularly relating to transmission. The
reality is we're electrifying as an economy. We're investing a lot more in generation, is a lot more electricity transmission
being built. It's a regulated formula, and we are still seeing that effect in prices."
https://www.iheart.com/podcast/211-the-mike-hosking-breakfast-24837692/…
"Whilst the marginal cost of wind and solar is close to zero, the system costs are not.
In the UK, for example, with a peak demand at around 45GW, there is now 120GW of capacity where 60GW was once sufficient. In other words, the capacity on the system has to double for the same equivalent firm-power output. This doubling applies to the grid as well, and all the storage is extra. Finally, the costs of the back-up, notably gas, go up because gas power stations are rendered intermittent too as wind swings between exceeding the total demand and contributing very little.
The costs of this additional capacity and extra grid and extra storage are baked into the future costs of the UK electricity supply for years to come, depending on the guaranteed prices that renewables are contracted for. These renewables rarely, if ever, pay for the system costs they cause as a result of their intermittency, and hence the costs of the contracted renewables do not represent anything like the consequences of adding this type of generation onto the system."
https://dieterhelm.co.uk/energy-climate/what-to-do-about-the-industrial…
intermittent solar panels and windmills in remote locations and connecting them to the gird isn't cheap.
Au contraire. When I got solar and powerbank installed last July all quotes were based on the prediction of 5% increase in power cost annually with a payback period of 12.7years. Solar alone would have been 7.4years.
We have since seen a 12.5% increase YoY and now stating another 8% to come. From where I sit, that equates to a sound investment.
I embarked on this with the expectation of high increases for years thanks to a family member having a long history in the electricity sector across the country and noting that it will likely be this way with gas dying out, seedy industry practices of waiting to take action and milking around 1hr of peak spot pricing before cranking the peaker plants to add to the grid (planned decisions, but proving it from the outside is decisively difficult).
Planning to to crunch my numbers come this July, see how much my savings have been and what my current ROI trajectory is, but either way, the higher the cost increases, the better the ROI, and haven't paid a power company since around October 2025 so happy days. Another benefit being if you go away for a long weekend, turn off the hot water cylinder and sell most of the solar back tot he grid, but admittedly this varies as to the payback per kWh around the country depending on location.
I signed & paid deposit on 27kW solar installation yesterday. Est payback ~6yrs without battery (possible future upgrade).
<$20k top quality panels & inverter everything installed, compliance etc
"from where I sit" is not the system cost. You bludge off the grid to feed back in to it when you feel like it and ask everyone else to provide balancing, inertia, transmission etc.
It's a bit rich to call me bludging off the grid when you appear use nothing but it, thus adding demand for peak usage times and the likes of huntly to burn coal. Harvesting energy from the sun and taking load off the grid in peak times, thus reducing need for peaker plants use, isn't bludging at all, it is beneficial.
You have a battery, so the allegation is a little weak. You can supply yourself at peak times. I just have panels, so could be seen as a bludger. However, I didn't force Meridian to pay me for my power and I'd suggest they are more sophisticated operators than me, so I feel pretty relaxed about the charge. My power must be useful even if it's produced in the middle of the day.
Exactly. And you can change usage behaviours to use as much of the live generation as possible through peak generation times form the panels. Delay timers for dishwasher, and washing machine to put on in the morning, using a hat pump to et the thermal mass of the house up through the afternoon so it takes longer to cool down in the evenings, Timer for the hot water cylinder to heat during the day only etc etc
All good things but doesn't move the dial on transmission, inertia etc. System costs.
German Minister for Economic Affairs and Energy.
"One fact has been concealed for too long: an energy transition that ignores system costs will ruin the country that it pretends to save.
It can't go on like this. The renewable industry has grown up and now has to take responsibility – systemically and financially. By 2035, system costs will rise to 90 billion euros a year. The problem is structural: we have shut down 20 gigawatts of secured, low-carbon nuclear power. In addition, there are massive, politically driven network investments and a market design that ignores reality."
https://www.faz.net/aktuell/wirtschaft/katherina-reiche-jetzt-ist-zeit-…
Your own decision and finances. There should be no govt. subsidies on household solar. There is a reason for buy back to be lower than what you pay. It's just the difference that is in question. There are very real grid problems with 1000's of house hold solar supplying the grid and this shows up even at the distribution level. The UK will be entering that scenario this summer. I think there'll be a problem in Oz as well.
"Brown says the Government has set out very clear expectations that affordability is a top priority when it comes to energy prices."
Cui Bono. Remember who the 51% shareholder is.
"Electricity generator-retailers face the same pressures being felt throughout the economy, with inflation being a major contributor to power price increases over the last 10 years."
He's probably referring to sector salaries.
"Our members are investing billions of dollars into new generation projects to ensure a strong, secure supply of accessible electricity for New Zealanders. This level of investment is only possible with strong balance sheets," the spokesperson says.
The first act of the generators & lines companies following deregulation was to change the basis of depreciation from historical cost to replacement cost, thereby reducing tax = increasing profits. They & the govt have banked these for nearly 3 decades
"Electricity prices saw an annual increase of 12.5%, according to Statistics New Zealand’s consumers price index (CPI) data drop last week. Electricity prices have been the largest contributor to the annual inflation rate for three quarters in a row."
"Electricity generator-retailers face the same pressures being felt throughout the economy, with inflation being a major contributor to power price increases over the last 10 years."
Seems like a circular argument. Are power prices increases causing inflation or being caused by inflation?
Power companies have lights and air on too. So obviously they're badly affected by the 12% price rises and must pass them on.
Willis - "In terms of electricity, that reflects regulated price increases, particularly relating to transmission."
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