There’s concern ahead of winter that kiwis are set to see big hikes in their power bill and supply could be constrained if current dry conditions continue.
From April 1 lines charges will rise, meaning an extra $10 a month for the average household’s power bill. For some regions, it could be as high as $25, to cover increased costs and investment in infrastructure.
Infometrics forecaster Gareth Kiernan says Mercury recently told customers to expect almost a 10% rise in their power bills.
“If that’s replicated across other companies and it could well be the case those are going to be the largest increases in power prices that we’ve seen since about 2003, 2004 and we did have a bit of a power crisis at that point in time,” he said.
After low rainfall in January and February hydro lakes are much lower than they usually would be this time of year. While it’s not setting off alarm bells yet, it’s not ideal.
Transpower chief executive James Kilty says fortunately there’s still plenty of time for things to change.
From April 1 lines charges will increase which means the average households power bill go up by about $10 a month, although in some regions it could be as much as $25. (Source: 1News)
“We are overall, though, in the energy mix better off than we were this time last year due to the arrangements being made for alternative fuels, coal and some gas contracting happening at this time, so the industry is preparing,” he said.
As with previous winters there’s also the possibility of constrained supply during the coldest mornings and evenings.
“There are always the potential for some moments of stress in the system. If we see dry conditions continue, however at this time there’s no forecast of that,” Kilty said.
While there wasn’t significant rain on the horizon in the coming weeks he was hopeful it would come before winter.
Octopus Energy’s chief operating officer Margaret Cooney says already the spot price for wholesale electricity is climbing.
“Electricity prices are really high for this time of year. So they’ve been sitting around the three hundred dollars (per megawatt hour), potentially upwards of that,” she said.
“It’s too early to say really how the winter will be. But the current signals are not great.”
Last winter, low hydro levels and a shortage of gas sent the energy sector in a tailspin. The crisis prompted a series of inquiries and a taskforce, although it’s unlikely any changes will be in place in time for this winter.
The energy sector has struggled in recent years with a combination of issues including a historic lack of investment and an increase in demand.
While households are largely insulated from the wholesale price spikes, Gareth Kiernan says it does partially trickle down eventually.
“The Electricity Commission estimates that about 32% of the price that you end up paying as a consumer for power is made up of the wholesale price”.
Kiernan says he thinks the high wholesale prices in recent years are still to be passed on to kiwis.
