A business owner in Kerikeri pays 40 percent more for electricity than one in Wellington. Not because they use more power, not because generation costs are higher, but because the regulatory architecture of New Zealand’s electricity market spreads fixed infrastructure costs across fewer customers in provincial areas. The result is a compounding disadvantage for regional economies that no one in the system has a strong incentive to fix.
The MBIE Quarterly Survey for May 2025 puts the national average retail price at 39.3 cents per kWh. Wellington City pays 34.74 cents. Kerikeri pays 48.43 cents. Translated into household bills, RNZ calculates that a four-person family in Buller pays roughly $325 a month compared to $225 in Wellington. That is $1,200 a year in extra costs before the next round of increases arrives.
Lines charges are the mechanism, not the mystery
About 40 percent of a typical power bill is lines charges, the cost of moving electricity from generator to premises. These are set by the Commerce Commission and collected by local distribution companies that operate as natural monopolies.
The maths is brutal. Kerikeri’s lines component is 19.4 cents per kWh. Auckland’s North Shore pays 11.9 cents. Cromwell tops the country at 20.5 cents. Fewer customers, same poles and wires, higher per-unit cost. As Powerswitch general manager Paul Fuge puts it: regions needing substantial infrastructure but having fewer people to spread costs end up paying the most, and those regions are often lower-income areas.
The inequity is not subtle. Fuge calls it “a tragedy that those in lower income areas are having to pay more for what we regard as an essential service”.
DPP4 unlocked the floodgates
For five years under the previous regulatory cycle, lines charges were relatively flat, actually falling in real terms. That masked underlying cost pressures. When DPP4 took effect on 1 April 2024, the Commerce Commission unlocked nearly $6 billion in infrastructure spending, adding $10 to $25 per month to household bills depending on location. The Electricity Authority confirmed DPP4 is the primary driver of the April 2025 bill increases, with the full impact still flowing through as retailers adjust pricing.
The trajectory does not flatten. Consumer NZ forecasts at least a further 5 percent increase in 2026 after a 12 percent rise across 2025, with lines charges projected to keep climbing by an average of $5 per month through to 2029. Prices are now 60 percent higher in real terms than when the electricity market was reformed 25 years ago.
What this costs regional businesses
Household hardship makes headlines. The business impact gets less attention but matters more for regional economic viability.
A Northland household paying $100 to $150 more per month than an Auckland equivalent is spending that money on power instead of local shops, cafes, and services. In communities running on thin margins, that demand destruction compounds. Any business with significant electricity consumption, from hospitality to cold storage to food processing, faces a structural cost disadvantage relative to Auckland or Wellington competitors that widens on a published timetable.
The manufacturing evidence is stark. A 2025 MBIE-commissioned study estimated that elevated electricity prices from 2017 to 2025 cost the economy approximately $5.2 billion in lost GDP. Meanwhile, the four major gentailers posted combined operating profits of $2.7 billion in 2023, and six-month profits to December 2025 ran 45 percent above the prior year.
Fuge’s assessment is blunt: “Electricity prices in New Zealand have got very high and are sort of detached from the cost of producing it. That’s really hurting consumers and our businesses, and it’s a threat to the economy as well.”
Wholesale prices fell but bills did not
Here is what should concern anyone who believes markets are supposed to work. Wholesale electricity prices have actually fallen due to heavy hydro inflows. Consumer NZ notes those lower generation costs are not being passed through to consumers. The gentailers paid $10.8 billion in dividends over a decade while investing only $4.5 billion in plant and equipment. Consumer NZ chief executive Jon Duffy’s response: “We hear the same lines every year. Big profits are needed to fund investment. But the investment is [never] here in sufficient quantity.”
Electricity Networks Aotearoa argues the spending is necessary on infrastructure that is in many cases over 50 years old. That may be true. It does not explain why the cost falls disproportionately on communities least able to bear it.
The location decision just got harder
For any business owner weighing a regional location, or managing an energy-intensive operation outside the main centres, this is not background noise. It is a material input cost increasing on a known schedule with no mechanism for relief. The Commerce Commission sets DPP on a cost-recovery basis. The lines companies collect what they are allowed. The gentailers price against the market. The regions pay. Every year, a little more.
Sources
- RNZ: Is your power bill average?
- RNZ: Rising line charges hit power consumers hard
- RNZ: Consumer NZ issues power price warning
- Consumer NZ: Shocking stuff – consumers in lower income areas paying more for power
- Consumer NZ: Power prices predicted to surge
- NZ Manufacturer: Power politics – how high electricity prices are squeezing NZ manufacturers (2026-03)
- Newsroom: Yes, power bills are rising – but keeping them low will cost us more in the long run (2026-04-01)
- Electricity Authority: Eye on Electricity