The Electricity Authority wants to know more about what's pushing power costs up for households, as it asks companies for more details on electricity prices

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.