While electricity companies rake in profits, pensioners and low-income households are rationing heat just to get through winter, writes Catherine McGregor in today’s extract from The Bulletin.
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Bills bite deep as power prices soar
For thousands of New Zealanders, the midwinter chill isn’t just uncomfortable – it’s also a major financial hit. Power prices have jumped by about 11% nationally in the first half of this year, and older people are among the most affected. As RNZ’s Checkpoint reported yesterday, pensioners are resorting to drastic tactics – turning off hot water cylinders for days or going to bed before dark – to cope with bills that have leapt from $85 a month to over $130. Greta Bond of Age Concern Canterbury says older people, particularly those who live alone, are increasingly forced to choose between warmth and other essentials. “I think it’s a really appalling indictment of our society when you have people who are older who are having these challenges to their dignity and wellbeing based on a few dollars,” she told Checkpoint.
If you’re struggling to pay your power bill, all is not lost. As Shanti Mathias explains in The Spinoff, power companies have a number of support mechanisms in place, including bill credits, more time to pay and even funding for curtains, insulation and heat pumps.
Gentailers profit while investment lags
Behind the eye-watering bills sits a market structure that, Consumer NZ argues, is failing ordinary New Zealanders. About 85% of households still rely on one of the original ‘gentailers’ – companies that both generate and retail electricity – like Mercury, Meridian, Contact and Genesis. Consumer’s Jessica Walker says these firms have not kept up with needed investment in new generation assets, instead enjoying record operating profits of $2.7 billion last year. Today the Herald reports (paywalled) that Mercury’s ex-CEO Vince Hawksworth took home $3.8 million in base pay and benefits in 2022/23, making him one of NZ’s best-paid executives at the time. Meanwhile, “consumers pay the price for the lack of investment in new generation, as we have lurched from energy crisis to energy crisis,” Walker writes.
Despite a 38% rise in residential power prices since the 1990s, the promised competition and lower bills never materialised. Instead, high dividends and asset revaluations keep shareholders happy while consumers pay more to keep the lights – and heaters – on.
Gas price surge adds insult to injury
The squeeze doesn’t stop at electricity. Households with gas connections face another hit, paying separate daily charges for gas infrastructure on top of their electricity lines. With domestic natural gas reserves declining sharply, scarcity is pushing up prices further, reports Sharon Brettkelly for RNZ’s The Detail podcast.
Gas suppliers have started to hike their prices, with Powerswitch’s Paul Fuge saying he’s seen increases of up to 20%. According to Fuge, an electricity-only house will almost always be much cheaper to run than a gas-electricity house, and not just because of the double fixed charges. Gas customers also miss out on the cheapest electricity plans, he tells Brettkelly, because most gas suppliers demand that customers also take their electricity, and the cut-price electricity providers don’t do gas.
Government backtracks on gas price increases
While households juggle rising costs, the government has faced embarrassment over basic facts. A recent cabinet paper promoting a $200 million co-investment in new gas fields overstated residential gas price increases by more than fivefold, Newsroom’s Andrew Bevin reports (paywalled).
“In 2024, commercial prices rose by 58 percent, wholesale by 48 percent, industrial by 44 percent and residential by 17 percent,” the paper read. In fact, as the red text in the paper’s margin clarified, “The correct figures should read wholesale (25 percent) industrial (19 percent) commercial (8 percent) and residential (3 percent).” MBIE blamed a calculation error but defended its broader claim that prices are rising due to tightening supply, pointing to a 27% drop in natural gas reserves over the past year.
Critics have jumped on the error, with Greenpeace’s Gen Toop saying it reveals resources minister Shane Jones as having either “a deeply inadequate understanding of the energy system in Aotearoa, or a flagrant disregard for the facts. Either way, this false information has been used [to justify] funnelling taxpayers’ money into the pockets of fossil fuel corporations.”