EVs in mix for electricity price review

Changing technology such as electric vehicles (EVs) are forecast to impact on the electricity market.

That’s according to a discussion document released by energy and resources minister Megan Woods on September 11 for the first stage of the Electricity Price Review.

“Our electricity market needs to be agile enough to adapt to the challenges that technologies like EVs, solar panels and other forms of distributed generation will pose to affordability,” Woods says. “It’s clear that if we don’t manage these changes well the costs will fall on those least able to afford them.”

The document “shines a spotlight on the problems pushing up power prices for Kiwi families”, Woods says.

The next review phase will develop recommended solutions to the various issues identified.

“I encourage consumer groups and industry to take the opportunity to make submissions (closing October 23) on this report to assist the panel in recommending the way forward,” Woods says.

“The report is a clear demonstration that the market is not working for everyone. New Zealanders deserve affordable electricity but too many households are struggling to pay their bills. The next step in this process is a conversation with the public about how we remedy that.”

Although residential electricity prices have been relatively flat since 2015, they are 79% higher than they were in 1990, Woods says. Over the same timeframe, commercial prices have declined by 24% and industrial prices have increased by 18%.

“For residential customers it appears that a two-tier retail market is developing. People who actively shop around enjoy the benefits of competition, and those who don’t are stuck with higher prices. The average gap between the cheapest retailer’s price and the incumbent retailer’s price has increased by about 50% since 2002, after accounting for inflation.”

The review found some households struggle to understand the various plans and how to choose the one that’s best for them, and low-income consumers miss out more often on prompt-payment discounts (as high as 26% of the bill).

The review finds a major driver is a shift in distribution costs from business customers to households, alongside rising generation and retail costs, Woods says.

She expects to receive the final report in May 2019.