Power bill rise likely as networks ‘grow and adapt’

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

The Commerce Commission is warning higher power bills are on the way as it starts consultation on how much the region’s lines company is allowed to charge for distributing electricity.

In a consultation paper published last week, the Commerce Commission is seeking views on the key issues it will consider in setting revenue limits and quality standards from 2025 through to the end of the decade for the majority of local lines companies, covering over 80 percent of all residential and business customers in New Zealand.

“Firstlight Network, which delivers electricity across 12,000 square kilometres in Tairāwhiti and Wairoa, is one of the 16 lines companies subject to price-quality regulation in New Zealand,” Firstlight Network acting operations manager Linda Broughton said.

“This means that there are ongoing protections for local consumers around price and quality, including quality of supply.

“The Commerce Commission resets the Default Price-Quality Path every five years, and the team at Firstlight Network is providing feedback as part of the consultation process.

“As the recent severe weather events have shown, regional energy resilience is one of several critical considerations.

“Our 2023 Asset Management Plan outlines our long-term focus on investing to ensure network security, supporting energy transformation and decarbonisation, and working to minimise the impacts on distribution affordability.”

Commissioner Vhari McWha said the general need for substantial investment by lines companies was clear.

“Networks will need to grow and adapt to meet new demands from the increasing electrification of transport and industrial process heat, as well as connecting new local generation. At the same time, they will need to prepare for an expected increase in extreme weather events and keep up with regular upgrades of ageing assets.”

Distribution charges make up about 27 percent of the average power bill.

Ms McWha said the potential costs to consumers would be significant, meaning “it is more important than ever that we ensure the plans and investment decisions of lines companies are in the long-term interests of consumers”.

“Decisions made by lines companies in the coming period will have an enduring impact on future electricity bills, so it is critical that proposed investment is prudent, efficient and to the long-term benefit of consumers. This includes making best use of existing capacity and fully exploring options such as demand side management and batteries.”

She cautioned that, “consumers will ultimately need to pay for the services they receive and we are alive to concerns that pushing revenue out into the future could affect lines companies’ ability to pay for necessary investment”.

The Commission is seeking stakeholder feedback on the issues identified in its paper.

The Commission will publish a draft decision for further consultation in May 2024 and will make a final decision in November 2024.

A copy of the consultation paper can be found on the Commission’s website. Submissions close on Friday, December 15.