Consumer NZ cautions that electricity prices may climb by at least 5% more this year, on top of last year’s 12% hike.
For Powerswitch general manager Paul Fuge, the figure was a conservative estimate. He said the rise would primarily stem from the upcoming phase of line charge increases.
Starting April 1 last year, lines companies gained approval to raise their charges. While the initial step was expected to be the largest, annual adjustments could continue through 2030.
“There has been some pressure on the electricity prices on the wholesale market, so we might see some lifts in the energy price as well, which is kind of residual from that dry year we had a couple of winters ago making its way through to retail prices,” Fuge said.
“I’ve seen some power bill [increases] already that are higher than 5%… It really depends on where you live and which retailer you’re with and what plan you’re on.”
While price hikes often take effect from April 1, he said some retailers may opt for different timings.
Fuge explained that New Zealand’s heavy dependence on renewables exposes it to weather uncertainties, pushing retailers to factor in dry-year risks—even if they don’t occur—into their pricing.
“The pattern seems to be every three or four years we do have a dry winter, and our storage is actually quite low,” he said. “We’re never more than three or four months away from potential problems.”
He noted that prices are now 60% higher in real terms compared to 25 years ago, when the market was reformed.
The Electricity Retailers Association previously stated that electricity costs had remained flat or fallen in real terms for the past decade, but retailers have recently started passing on rising expenses like higher lines charges.
“It’s quite a bad situation. So, you know, we saw a 12% increase last year,” Fuge said.
“It’s a massive jump in electricity prices … household gas had a 17.5% increase last year.
Energy Minister Simon Watts announced on Monday that a contract for a liquefied natural gas import facility in Taranaki is expected to be signed by mid-year, adding that the facility would provide greater security and peace of mind for New Zealanders.
Fuge recognised that it aims to address the dry-year issue.
“I just think there are better ways to do it. You can’t make cheap electricity with expensive fuel.”
“It does seem like a bit of an own goal … we’re lucky in New Zealand; there’s so many low-cost renewable options. The fact that we’ve sort of been backed into importing high-cost fuels, you know, is a real own goal.”
He advised that consumers can still cut costs by comparing options or switching to time-of-use plans if they can shift their power usage to off-peak times.
“We would advise to have a look now. But it may be, for some people, you might want to wait until post-April 1 to make sure you don’t get caught out with a price change.”