A Consumer survey found that almost half of respondents said the price of their latest power bill was not fair and 46 percent of New Zealanders thought gentailers’ profit levels were not justified.
Photo: RNZ / Lauren Baker
Consumer NZ is asking how it is fair that power prices are rising at the same time as power companies are reporting large profits.
Meridian Energy on Wednesday reported a $226 million half-year profit. Earlier, Mercury had recorded a net profit of $20m in the year six months to December, and Genesis said its half year profit was $95m.
But at the same time, many customers have been receiving emails in recent weeks telling them that the cost of their power is set to rise this year.
After an increase of 12 percent last year, Consumer NZ has estimated that it is likely power prices will rise about 5 percent this year, largely driven by increases in lines charges.
A Consumer survey found that almost half of respondents said the price of their latest power bill was not fair and 46 percent of New Zealanders through gentailers’ profit levels were not justified.
An earlier survey found that almost one in five people cut back on food or other essentials to pay their power bills last winter and 21 percent went to bed earlier to keep warm.
Chief executive Jon Duffy said it appeared the gentailers’ social licence was starting to fade.
He said consumers saw companies talking “year after year” about needing profits to be able to invest in generation but had not seen that generation happen in a meaningful way for households.
“We don’t see that new generation come online or at least in the quantities that we need to lower prices. Consumer patience is running out with that.”
He said much of the new generation was tied to commercial contracts so households did not benefit.
The price of generation had come down on the back of a good year for hydro power, he said, but retail prices did not change. “That’s just printing money.
“The wholesale market is pricing in the potential dry year risk of there not being enough water in the lakes and there not being enough gas in the gas fields and that means they have to price in their risk which pushes prices up… I think people would have more patience if you saw a flood of renewable generation coming on to the market but we’re just not seeing that we’ve seen piecemeal incremental projects.”
He said in an advanced and industrialised economy the ability to pay for power should not be the issue it is in New Zealand.
Contact chief executive Mike Fuge said it had invested $2.4 billion in building energy infrastructure in the past five years.
“That is 2.4 terawatt hours of new generation, this is enough to power the equivalent of 320,000 Kiwi households…Contact remains focused on minimising price increases; however our input costs are increasing.”
He said lines and transmission charges made up 40 percent of an energy bill and continued to rise.
“New Zealand is in the middle of a renewable energy transition which requires significant investment in lines and distribution infrastructure, alongside the development of more renewable electricity generation.”
Mike Roan, chief executive of Meridian Energy, said he knew people wanted to lower prices.
“So do we, and we’re doing everything we can to achieve that – increasing generation supply and investing in new technology so we can offer even better offers to our customers. This result is going to help us deliver all that and more. When we do well, New Zealand gets the benefits. Around 80 cents of every dollar we pay in dividends goes to the government – 54 cents – or directly to Kiwis through their KiwiSaver and investment funds – 25 cents. We’re also one of New Zealand’s largest taxpayers – 27 percent of everything we earn is paid back as tax for the benefit of New Zealanders.
“Any suggestions that there’s not enough generation being built is just wrong. It’s in our best interests – and everyone’s interests – to make sure New Zealand has all the power it needs and at prices that are as affordable as possible. We’re continuing to build as much as we can, as fast as we can. And we’re not alone.
“The industry is currently building at a rate that is 25 percent higher than at the peak of Think Big and our development pipeline is big enough to double Meridian’s generation. We now hold 8.0 TWh of secured development options and a further 7.3 TWh of advanced prospects – more than a third of New Zealand’s current electricity demand.”
Bridget Abernethy, chief executive of the Electricity Retailers and Generators Association, said the organisation understood it was a challenging time for many households.
“New Zealand is in the midst of a renewable building boom.
“ERGANZ members have added more than $4.3 billion of investment in new wind, solar and geothermal to the renewables pipeline in the past year alone.”
She said MBIE data in the September quarter last year showed the lines component of a power bill up 16.7 percent and energy 6.6 percent.
“This reflects significant capital investment in transmission and local network infrastructure required to meet growing electricity demand across New Zealand.
“Anyone struggling to pay their power bill should contact their retailer as soon as possible, as there is a range of support options available.”
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