Kinleith Paper Mill Closure Shows Need For Urgent Reform In Electricity Market

“This is a sad day for the community at Kinleith, this will cause upheaval for those families losing jobs but also the wider community servicing the Mill,” says Octopus Energy Chief Operating Officer Margaret Cooney.

“The energy crisis we had last winter is not over. High prices for long term energy contracts were responsible for shutting down some of our largest regional employers, and it is still happening. As things stand, the electricity sector will continue to be a huge handbrake on economic growth.

“Before 2018 the average price for long term energy contracts was $70-80 per MWh. Since 2021 it has been an average of $150+ per MWh and the average ‘longdated’ price now (energy bought now for consumption more than a year in the future) is $200 per MWh out to 2028.

“To put these prices in context, a $100 increase in wholesale prices is a potential extra $47 million onto the energy bill of a large industrial producer. This price escalation has severe economic implications. The OECD estimates that every 5% increase in energy prices results in a 0.4% decrease in business productivity.

“Prices won’t come down until there is more competition in the electricity market.

We urgently need to put in rules that require operational separation between generation and retail arms of the major gentailers. This would make the market accessible for new players so they can enter, grow, and prices come down.

“Urgent action is essential to address this crisis before it further undermines New Zealand's economic prospects and overall wellbeing. Without such reform, people will continue to lose their jobs, and we will continue to lose business to more competitive markets,” says Margaret Cooney.

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