New Zealand Power Prices
New Zealand's diverse geography, natural resources, isolation and regulation mean that we have one of the most dynamic and fast-changing energy markets in the world.
How does generation affect power prices?
With our unique abundance of geothermal, water, tidal, wind and solar resources available to generate electricity, we enjoy the ability to generate clean energy. However these methods are not without risk and they can affect the prices we pay for electricity. Lower lake levels and lack of wind all need to be considered by the market when knowing what a unit of electricity is going to cost to sell you. Back-up fossil-fuel stations need to be on stand-by just in case supply cannot meet demand and this back-up plan costs us money.
Power prices seem to increase every year - right before winter. Why then?
Secondary to your energy retailer, there is a local network that delivers electricity to your door. Networks are required to set and publish their transmission and maintenance rates by 1st April every year. More often than not, energy retailers pass these costs on and this causes a price increase.
The timing of this change is unfortunate with winter also increasing power consumption, and while retailers can choose to absorb these lines increases and pass on later - typically the retailer needs to remove the risk and pass through immediately.
Retailers always seem to blame transmission charges. Surely the retailer looks to increase their take also?
Absolutely. Retailers need to cover their costs to serve, employ staff, invest in metering and billing services, and deliver a profit. This is perfectly reasonable, and insisting that retailers never increase prices to meet their commercial requirements is not realistic. Typically, New Zealand retailers do not look to overcharge unnecessarily as they need to avoid the risk of customer loss. In any case - if your retailer chooses to increase too much, you are always free to switch
Are New Zealand power prices ever going to decrease?
While it can never be certain, the possibility of an across-the-board reduction in energy costs is unlikely. New Zealand's remote location means we need constant investment in energy transmission maintenance and development and this will always fall upon the consumer.
What has been a trend of the last 2-3 years has been a general leveling-off of retailer increases. While the above mentioned lines and transmission companies increase annually, retailers increases have been minimal. With services like Powerprices.co.nz and increased consumer knowledge, retailers are more and more likely to decrease rates, offer incentives and exclusive deals to win and retain business.
