Another Power Price Warning

Tuesday, 5 November 2024, 5:25 pm
Article: RNZ

Susan Edmunds, Money Correspondent

Power prices offered to customers through comparison website Powerswitch have increased significantly this year, one retailer says, and there is a warning more bill pain may be to come.

Octopus Energy has looked at data from Powerswitch and compared January pricing with that available at the end of September.

It shows Contact had an average increase of 10 percent in Auckland, and Mercury 5 percent. Mercury's short term discounted offers lifted more than 30 percent in Auckland, Octopus said.

In Christchurch, Contact's prices were up almost 15 percent, Mercury's almost 10 percent, Meridian's almost 15 percent and Mercury's short-term discount offered more than 40 percent.

In Wellington, Contact's prices were up almost 10 percent, Mercury more than 5 percent, Mercury's short-term discount almost 25 percent and Meridian more than 5 percent.

Powerswitch general manager Paul Fuge said the situation was "not looking good".

"We are seeing a lot of price changes coming through."

He said it had been expected that higher wholesale prices would flow through to retail prices at some point. "But we didn't know when or to what extent... this analysis shows that is starting to happen."

Fuge said pricing could be hard to track because households even next door to each other could be paying "radically different" electricity prices.

But he said lines prices would increase 8 percent to 10 percent next year when prices go up $15 a month.

People who had been paying low user charges, which are being phased out, would also face another increase of about $150 a year.

"You've got a perfect storm of price increases, all going in the same direction.

"Normally you might see, as has happened before, energy price increases offset by a lines price decrease. But what we are seeing at the moment is all those things going up, there's no offsetting going on."

He said that was concerning when 20 percent of people already said they struggled to pay their power bills. "What happens when the price is put up again... we are really worried."

He said, if there was another crisis in wholesale prices next year, as seen in the middle of this year, "it could get really dire".

Gareth Kiernan, chief forecaster at Infometrics, said the price increases were not showing through in official data yet. The consumer price index showed household electricity cost up 5.9 percent in the last year.

"It doesn't sound that rapid and there is probably more to come but it's still the fastest since 2009 with the exception of the increase in GST in 2010."

He said the futures market had moderated in the last two or three months but prices were still double what they were three years ago.

A spokesperson for Mercury said it reviewed its pricing from time to time.

"We recently changed our Powerswitch offerings as we are conscious that from April 1, the forward path for transmission and distribution pricing, which is set by the Commerce Commission, will increase and this will flow through to consumers. Indications are there are further increases in April 26. Our Powerswitch offers are a mix of one- and two-year fixed offers and therefore need to reflect these increases. Prices for our existing standard rate and fixed rate customers have not changed."

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