Consumer NZ says households should brace for a rise in electricity costs following the Commerce Commission’s decision to allow increased investment in the electricity network.
Starting 1 April 2025, the average consumer’s electricity bill will increase by $10 per month ($120pa) to cover increased revenue for Transpower and local lines companies. The revenue is to be used for investments in the national and local electricity lines infrastructure.
The increase will represent a 5% jump in the average power bill.
“This increase will not be felt evenly across the country, with some households seeing higher bills depending on where they live,” says Paul Fuge, Powerswitch manager.
While the average monthly increase is $10, in some areas the average increase is as much as $25 a month, representing a 12% increase.
“While the need for infrastructure investment is clear if lines companies are to deliver the service we need in the future, it’s unfortunate that this comes during a cost-of-living crisis when so many consumers are already financially stretched. According to Consumer around 20% of households are already struggling to pay their power bills.”
The Commission’s decision sets a 44% maximum allowable revenue increase for Transpower over the next five years and a 47% maximum increase for local lines companies.
The Commission will smooth the increases over a five-year period. After the first-year’s increases (from 1 April 2025), households can expect annual increases of $5 per month in each of the following four years.
The increases are driven by the need to maintain and replace aging infrastructure, build new infrastructure to meet increasing demand, increase network resilience to adverse weather events exacerbated by climate change, and meet rising costs in the sector.
Increases are just the beginning
Fuge warns that although the current increases are capped, they are just the beginning.
“The transmission and distribution components of your bill will rise, but with sustained elevated prices on the wholesale electricity market, retail prices for the electricity itself are also likely to climb. Consumers should prepare for further price hikes down the line.”
Consumers are encouraged to act now by using Powerswitch to compare power providers and, where available, lock in better rates.
“It’s concerning that many consumers haven’t switched providers in years,” says Fuge. “Changing can save you hundreds of dollars a year – currently on average consumers using our free and independent Powerswitch service are saving $500 per year.”
Key points from Consumer NZ
Bill impacts: Households will see an average $10 increase in their monthly electricity bills, with regional variations. Some regions will experience increases of up to $25 per month. The increases will represent a 5–12% increase in the average household power bill.
Long-term costs: While the increases are spread over five years, further price hikes are anticipated, particularly in the wholesale electricity market.
What consumers can do: Use services like Powerswitch to shop around for the best electricity deals and consider adopting cost-saving options, including time-of-use power plans, solar or more efficient appliances.
Notes
For further details on the proposed revenue increases and the impact on electricity bills, see the Commerce Commission’s release: https://consumernz.cmail19.com/t/i-l-ftlwuy-ijlytrkuit-j/
Powerswitch is a free and independent service run by Consumer NZ that allows consumers to easily compare electricity providers and save on their power bills: https://consumernz.cmail19.com/t/i-l-ftlwuy-ijlytrkuit-t/
