Brace for higher power prices, Consumer NZ says after Commerce Commission investment decision

The Comerce Commission has given the green light to power price rises. Photo / 123rf

Consumer NZ says households should brace for an average 5% rise in electricity costs following the Commerce Commission’s decision to allow increased investment in the electricity network.

Starting from April 1, 2025, the average consumer’s electricity bill will increase by $10 per month ($120 a year) 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.

“This increase will not be felt evenly across the country, with some households seeing higher bills depending on where they live,” Powerswitch manager Paul Fuge said.

Powerswitch is an independent service run by Consumer NZ that allows consumers to compare electricity providers and save on their power bills.

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, Fuge said.

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 ageing 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.

Fuge warned 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.”

Commissioner Vhari McWha said the decisions recognised the significant investment required to maintain and upgrade the system.

”While the decisions mean there will be an increase in the prices most consumers see in their electricity bills, we also understand the importance of incentivising businesses to invest, improve, and meet consumer demands,” she said.

”Deferring investment would mean even higher future prices and a network that does not meet consumers’ needs.”

Without the Commission’s decision to spread or “smooth” revenue recovery over a five-year period, consumers could be looking at price increases of around $20 per month. After the first year, consumers can expect monthly bills to increase by an average of about $5 ($55 annually), in each of the remaining four years.

McWha says factors such as a growing population, an increase in extreme weather events, and greater reliance on electricity as a fuel, for uses like transport and industrial process heat, continue to test the capacity and resilience of the country’s electricity network.