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Opportunity for greater collaboration with NZ Electricity

The Electricity Retailers’ Association of New Zealand (ERANZ) welcomes the first report on the Electricity Price Review (EPR). This review is an opportunity to provide feedback on the first round of findings and share insights to drive improvements for all electricity users.

“We are encouraged that the report finds that the current system is on-the-whole working well. It is clear where the Panel believes improvements can and must be delivered, including managing better the impacts on those who suffer energy hardship,” says Jennie Langley, Independent Chair ERANZ.

“A number of ERANZ members already have well-established programmes underway to support those who are vulnerable or experiencing energy hardship. However, there is room to work more effectively by collaborating with social agencies including Housing New Zealand and the Ministry Social Development, and we have made some progress in this area already, says Nick Robinson, Interim CE, ERANZ.

“We have an initiative in place to scale-up the impact across our sector for customers who need it the most. We plan to make a real difference where there is the most need,” says Robinson.

Many drivers impacting price

Over the past 30 years, since 1990, there have been a number of changes that have affected the price of electricity, including changes in the wholesale price of electricity, major investment in new power stations, upgrading the National Grid, the introduction of GST and the Emissions Trading Scheme, amongst others.

The latest data from MBIE shows that over the past 5 years the unit of price of electricity has stabilised. The electricity component (comprising metering, levies and taxes, retail and generation) has decreased by 4.0% while the lines component has increased by 11.7%.

Efficiency is just as important as price

“For many customers, what matters most is the size of their total bill today, and in the future,” says Langley.

New Zealand needs to do more to improve our housing stock so that we are more efficient users of electricity and energy overall. Putting the unit price of electricity aside, New Zealand households are overall some of the highest users of electricity (6th out of 32 countries) in the OECD. This is because it takes more electricity to heat many New Zealand homes compared to other OECD nations.

Next generation of comparison tools required

The report clearly states that more work is needed to improve the understanding and tools to help our customers seek out the package that is best suited to their needs. Often, price is not the only factor customers are considering; many are also looking for benefits such as flexibility in the way they pay, apps to track their usage as well as other services such as broadband bundled into their contracts.

“We are pleased to see and agree with the report that the Low Fixed Charge is no longer working for the purpose it was designed for and an alternative approach is needed, says Robinson.

Exciting future ahead, but must take care in transition

“The electricity sector is at a critical point as new technology is transforming the sector. We need to keep our focus on the future and stay world-leading across such things as automated outage notifications, domestic solar and batteries, electric vehicles, and bespoke pricing options. Our focus is on creating opportunities for everyday electricity consumers, says Robinson.

“The prospects of this transition are exciting. Looking to the future, the whole industry – generators, transmission, distribution and retailers – will need to work closely together. Not only to put the support in place now to ensure that those most vulnerable are supported during this transition, but also to ensure that New Zealand as an economy is able to meet its wider well-being aspirations, including the goal of transitioning to a low-emissions economy, say Langley.

“We look forward to submitting our detailed feedback including practical solutions to address key areas of concern later in October. ERANZ encourages all participants in the industry to take the time to review the findings and engage in constructive debate about how we can collectively achieve the best outcomes for consumers,” says Langley.

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