Discussion document for Electricity Price Review released
Energy and Resources Minister Megan Woods says today’s release of the discussion document for the first stage of the Electricity Price Review shines a spotlight on the problems pushing up power prices for Kiwi families.
“The review panel, chaired by Miriam Dean QC and with the co-operation of those in the industry, has delivered a discussion document with much food for thought and identified issues that need to be addressed. I want to thank them for the clear and accessible work they have produced.
“From here, the Review will begin its second phase, developing recommended solutions to the various issues that have been identified. I encourage consumer groups and industry to take the opportunity to make submissions on this report to assist the panel in recommending the way forward.
“The report is a clear demonstration that the market is not working for everyone. New Zealanders deserve affordable electricity but too many households are struggling to pay their bills. The next step in this process is a conversation with the public about how we remedy that.
“While residential electricity prices have been relatively flat since 2015, they are 79 per cent higher than they were in 1990. Over the same timeframe commercial prices have declined by 24 per cent and industrial prices have increased by 18 per cent.
“For residential customers it appears that a two-tier retail market is developing. People who actively shop around enjoy the benefits of competition, and those who don’t are stuck with higher prices. The average gap between the cheapest retailer’s price and the incumbent retailer’s price has increased by about 50 per cent since 2002, after accounting for inflation.
“The Review has found that some households struggle to understand the various plans and how to choose the one that’s best for them, and low-income consumers miss out more often on prompt-payment discounts – which can be as high as 26 per cent of the bill, and which budgeting and advocacy groups say are really late-payment penalties.
“On the disparity between residential and business prices, the review finds a major driver is a shift in distribution costs from business customers to households, alongside rising generation and retail costs.
“The report also highlights the major changes that are facing the sector in coming years thanks to changing technology.
“Our electricity market needs to be agile enough to adapt to the challenges that technologies like EVs, solar panels and other forms of distributed generation will pose to affordability. It’s clear that if we don’t manage these changes well the costs will fall on those least able to afford them.
“This review was part of the coalition agreement between Labour and New Zealand First. I look forward to the discussion and seeing the panel’s recommendations on next steps.
“This Government is committed to affordable power for Kiwi families and this report is an important step towards that goal,” says Megan Woods.
Submissions on the report close on 23 October.
The final report is expected to be
delivered to Minister Woods in May