NZ electricity prices 'middle of pack' among developed nations

The proposal to create a monopoly buyer of wholesale electricity to curb price increases has fuelled debate over the cost of power. Photo / Thinkstock

Countries with an electricity buyer of the type proposed by Labour and the Greens have some of the lowest power prices - and some of the highest.

The proposal to create a monopoly buyer of wholesale electricity to curb price increases has fuelled debate over the cost of power.

But Electricity Authority boss Carl Hansen this week said New Zealand's residential electricity prices were "about middle of the pack" compared to other developed countries.

Data supplied by the authority shows that for 2011, New Zealand's residential power charge of 27.17c a unit or kilowatt/hour was slightly higher than the average of 26c for 27 developed countries.

The cheapest - 11.2c a unit - was in South Korea, which has a single buyer. However, the third most expensive power at 35.25c a unit was in Italy, which also has a single buyer.

The Electricity Authority figures show how power prices for ordinary New Zealanders have risen over the past three decades. The price was 16.56 a unit in 1979 when prices were among the cheapest in the developed world.

But Mr Hansen said a key reason for much of the increase since then was the reversal of a subsidy from industrial and commercial users to households. He also said prices had increased markedly from 2000 for a range of other reasons, including a rise in gas prices and the costs of building new transmission.

Energy analyst Bryan Leyland said while it was true more expensive generation had been built in recent years, "that doesn't have to push up all generation by the same amount, which is what this market does".

Labour finance spokesman David Parker said that for consumers to get the benefit of low-cost power coming from hydro, wholesale prices should be based on "the cost of production rather than - as we have in New Zealand - the marginal cost of the most expensive power dispatched".

"The easiest way to do that is through a single-buyer model."

Power costs

Residential power prices per kw/h in 2011:

• South Korea - 11.2c
• US - 14.88c
• UK - 25.90c
• NZ - 27.17c
• Australia - 29c
• Japan - 32.98c
• Italy - 35.25c

Source: Energy Authority, Australian Energy Market Commission