A woman was detained at a property in rural Nelson owned by Paul Hogarty after she went to read the power meter. Hogarty has been sentenced in the Nelson District Court to 20 months in prison. Photo / 123RF
A woman was detained at a property in rural Nelson owned by Paul Hogarty after she went to read the power meter. Hogarty has been sentenced in the Nelson District Court to 20 months in prison. Photo / 123RF
Opinion by Bridget Abernethy
Bridget Abernethy is chief executive of the Electricity Retailers and Generators Association of New Zealand
THE FACTS
Commentary on electricity prices and market structure suggests a radical shake-up, but the Electricity Retailers’ and Generators’ Association of New Zealand (Erganz) disagrees.
Eganz members are investing over $6 billion in renewable projects to increase supply and reduce prices.
Electricity prices rose 8.4% last year, mainly due to rising line charges, not generation costs.
Lately there’s been a lot of commentary about electricity prices, investment signals and the structure of the electricity market in New Zealand. Some have claimed our electricity system is fundamentally broken, that the only fix is a radical structural shake-up separating generation from retail.
This is thewrong solution for the real challenges facing our electricity system, and risks slowing the progress we need to make. We welcome healthy debate – because access to affordable electricity affects us all – but at a time when New Zealand needs more generation, and lower costs, disruption is the last thing we can afford.
Erganz members know the best way to help reduce prices is to increase supply, and this is exactly what they are doing, as quickly as they can. Over the next five years, our members are investing more than $6 billion in new renewable projects, including grid-scale batteries, wind farms, solar farms and geothermal projects, ensuring there is reliable and affordable clean electricity when it’s needed most.
Electricity prices rose 8.4% last year, mainly due to a 20.1% increase in line charges. Photo / Mark Mitchell
Just this week, through co-operation on the Huntly strategic reserve, our members have worked together to help secure the electricity supply New Zealand needs, making sure the lights and heaters stay on when the weather can’t provide the fuel our largely renewable electricity system needs.
As we experienced during winter last year, without this firming back-up fuel, wholesale market prices are volatile. Now, after a decade of flat electricity prices, inflation and rising lines charges are also starting to affect household bills.
Electricity prices rose by 8.4% over the past year, driven mainly by factors beyond the cost of generating electricity, such as the revenue changes for lines companies approved by the Commerce Commission that have resulted in a 20.1% rise in line charges.
But despite claims of a broken electricity market, the electricity generation portion of our household bills increased by a more modest 4.5%, roughly in line with other cost increases over the same period.
The transition to a low-carbon, renewable-energy system will be bumpy and short-term increases in wholesale electricity costs are being experienced around the world as countries work through this challenge.
Erganz members are investing over $6 billion in renewable projects to increase supply and reduce prices. Photo / Supplied
Without adequate generation and a flexible back-up fuel supply, such as a steady supply of gas, more hydro storage or the deal recently inked by large generators to ensure fuel for the Huntly power station, we will see increased volatility in wholesale prices.
Volatility is not the same as inefficiency. Although New Zealand experienced high prices last winter, this July wholesale electricity prices were the lowest they had been since 2018, demonstrating the direct impact weather and fuel shortages have on prices.
We are encouraged that the Government is looking closely at the electricity system through initiatives such as the review of electricity markets and the Energy and Competition Task Force, which provide opportunities to enhance the system in ways that help consumers.
The key to successful reform is to focus on the most practical improvements that deliver more reliable and affordable electricity for New Zealanders.
This means focusing on removing barriers to building new generation, encouraging new entrants and improving access to market information.
The core of any future reform must be a focus on accelerating renewable investment. New Zealand doesn’t need more disruption – it needs more electricity generation and the space for our members and others in the sector to get on with the job of doing just that.
