News Updates.


18 June 2012

Winter power price rises bite

By Nicholas Jones

Households will be paying higher power bills this winter as energy price increases made months ago bite in the cold weather.

The increases will be especially felt in the North Island.

Some Auckland households face increases of up to $64 for the three months of winter.

Figures from energy retailer Powershop show an average-sized home in Auckland will face a power bill of up to $805 for June to August.

Budgeting services say that although most power prices went up in April, families will feel their true effect over winter.

"People are struggling with their bills already - even another $30 is going to make it really hard for some people," said Federation of Family Budgeting Services chief executive Raewyn Fox.

"There have been constant increases for five years or more. And it's a period when wages haven't gone up to the same extent."

Consumer NZ chief executive Sue Chetwin said people should use Consumer's Powerswitch website to check whether they could save money by switching electricity providers.

"Tens of thousands of people have switched, and that's carried through this year," she said.

"Eventually prices will start to converge, but at the moment there is still plenty of reasons for people to check out their cheapest plan and provider."

But Ms Chetwin said increases were largely inescapable in the long term.

A report by Consumer NZ last year said that since 2003, average power prices for homes had risen by almost 7 per cent a year.

Between 1982 and 1992, the average increase was only 0.6 per cent a year.

In the main centres, the typical family power bill has gone up 78 per cent in the past eight years.

"Energy prices are becoming an increasing part of people's bills, to a worrying extent," Ms Chetwin said.

Powershop chief executive Ari Sargent said the increases were caused by network upgrades, more risk in the wholesale market, and lower hydro lake levels.

Most power companies increased prices - some by up to 14 per cent - after grid operator Transpower and local lines companies increased their charges.

Transpower is upgrading the national grid, and power prices are expected to continue going up until at least 2015, when most projects will be completed.

Lines charges account for about 40 per cent of customer bills.

"We expect a further round of transmission cost increases next April," Mr Sargent said. "So unfortunately, we are on an upward rise across the board."

Creation of the powerswitch.org.nz website and a switching campaign last year prompted bigger retailers such as Contact Energy to introduce discounts to stem the loss of customers.

Contact lost more than 15,000 customers in two months after the Electricity Authority's "What's My Number?" customer switching campaign began in June last year.

Ms Fox said many low-income families were using plans which charged the same monthly fee over the whole year - something she encouraged.

"You build up credit in summer to take care of the winter bills, because to suddenly be finding more money in the middle of winter is really hard."

She said this year's power increases would be keenly felt as the cost of living had greatly outpaced wage increases.

"We've seen people who really haven't had salary increases for three or four years," Ms Fox said.

"And things were tight before prices went up over that period."

By Nicholas Jones

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