Electricity prices

How are electricity charges made up?

There are a number of processes for providing power to your home – and ultimately you pay for these processes in your bill.

• First, your power has to be generated. In New Zealand this is mostly from hydropower, geothermal power, and natural gas. There are 5 major generating companies in New Zealand: Contact Energy, Genesis Energy, Meridian Energy, Mighty River Power, and TrustPower.

• The power then has to be transmitted. Transpower operates the National Grid which runs the power from the power stations to all parts of the country.

• From there, your power is distributed. This is done by lines companies that own and operate the power lines in your local area. These companies connect power from the National Grid to your home.

• Your electricity is also retailed. This is the power company you deal with and that sends you your bill. Retailers buy the power produced by generating companies in a complicated system of trading called the New Zealand Electricity Market. It is at this level of electricity trading that you’ll hear terms like “wholesale market” and “spot pricing”. The wholesale price at which retailers buy electricity can have a big effect on the price you pay (and it should be noted that all the main generators are retailers as well).

So, your bill covers the generation, transmission, distribution, and retailing of power. It also includes a small levy that runs the Electricity Authority, which governs and regulates the electricity industry.

Why have electricity prices increased so much?

Electricity prices change due to a number of reasons, including the overall competitiveness of the retail market, demand and supply levels, the cost of new generation, natural gas prices, and infrastructure costs of delivering power to your door. 

The following have influenced prices over recent years: 

• Strong demand for electricity has outstripped electricity generation capacity, much of which was built in the 1960s and 1970s. This growth has required new power stations to be built, and these are more expensive than existing power stations.

• Around a quarter of the country’s electricity is generated using natural gas, and the cost of gas has increased sharply as the giant Maui gas field is replaced with smaller fields. 

The best ways to keep downward pressure on prices are to seek out and switch to the provider that offers you the best value for money, and by using energy efficiently (see Saving energy). 

What is the low fixed charge rate and how do I know if I am eligible?

Electricity providers are required to assist low-use customers by offering them a low fixed charge tariff option of no more than 30c per day. Your provider should inform you at least annually of whether it may be beneficial for you to switch to a low fixed charge rate.

The low-user plan is generally the best option if you use less than 8000kWh per year, or 9000kWh  per year if you live in parts of the lower south region (all areas south of and including Christchurch, but excluding the West Coast).

The low-user plans have a lower fixed daily charge than the standard options and a higher variable charge for the electricity used. The amount of the variable rate varies depending on where you live and what type of meter you have. To qualify for a low-user plan, your home must be:

• Used or intended for occupation mainly as a place of residence.
• Your principal place of residence.

Certain very small distributor locations are exempt from these requirements.  

What are network rebates, and will I still receive them if I switch retailers?

Network rebates often apply when a local network company is owned by a trust. Rebates occur when dividends are paid to the trust, or a refund of line charges is made. Your new retailer will continue to pass on any network rebates to you, if you are eligible for them, in full via your bill.  

What offers are not included in Powerswitch?

There are situations where providers make offers to limited groups of customers and these contracts are not available to other consumers. The providers have tended to keep these offers confidential. We don't display these offers on Powerswitch.

There are also some companies that are not listed on Powerswitch.