More Context Needed For The Electricity Authority’s Energy Margins Data

The Electricity Retailers’ Association of New Zealand (ERANZ) welcomes the Electricity Authority’s (EA) scrutiny of its members' revenue and cost data, but more context is needed to fully understand the numbers.

Within the past two weeks, the EA has requested data from the electricity gentailers/generators regarding the price of electricity at which they buy and sell on the wholesale market, but the energy margin figures released by the EA only reflect market conditions at a point in time.

ERANZ Chief Executive Bridget Abernethy says gentailers/generators are reinvesting for the long-term, and the Electricity Authority’s energy margin figures fail to explain the full situation.

“By excluding things such as tax, transmission costs, depreciation and operational expense costs, these figures don’t show the gentailers’ long-term commitment to powering New Zealand through the transition to an electrified economy powered by renewable generation,” she said.

Other costs were also not reflected in the profit margin figures, such as the market-making function where generators are required to buy or sell NZ electricity futures on the ASX.

Ms Abernethy says, “Some generators say this requirement has been costing millions of dollars a week, as Australian speculators take advantage of requirements in order to profit from scarcity in the market.

“ERANZ again welcomes the EA’s assessment of the wholesale market but also believes the recent deals between Methanex and Contact and Genesis Energy, releasing much-needed gas for electricity generation, as well as the 20-year deal Meridian recently announced with the Tiwai Point smelter delivering 185MW into the system, demonstrate the sector’s ability to navigate times of fuel scarcity.”

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