New data calls into question power company claims that households have not been affected by the recent surge in wholesale power prices, one independent retailer says.
Data compiled by electricity retailer Electric Kiwi shows that the average “price leader” annual bill on Powerswitch – the best deal available to customers signing up or shifting provider – has increased from just under $2150 in June to about $2300.
Prices jumped up notably when wholesale prices increased through August.
Prices increased from about $300/MWh to more than $800/MWh.
But the best retail offer has remained at higher levels even as wholesale prices dropped back to $50/MWh and less.
Powerswitch general manager Paul Fuge said many lower-cost retailers and lower-cost plans were withdrawn from the market during the surge.
“This has increased the average annual cost across the plans remaining in the market. Additionally, some retailers have recently increased prices, particularly for gas.
“It’s important to note that many consumers are on fixed-term contracts, meaning their rates will remain unchanged until their contracts expire. Consumers on open-term contract or whose fixed-term contracts are expiring will be more likely to feel the impact of rising prices sooner.”
He said Consumer expected residential power prices to increase and the question was if not when.
Huia Burt, chief commercial officer at The Energy Collective and Electric Kiwi, said the data brought into question claims that households were not affected by the wholesale price problems.
“The fact remains that if you want to switch power suppliers now you are paying significantly more than you were at the start of winter.”
The Electricity Retailers Association said it did not want to comment.
Fuge said the lower-cost retailers and plans had generally not re-entered the market yet.
“We believe that this is due to elevated prices in the forward hedge markets.
“While recent weather conditions, including more rain and wind, have helped alleviate high spot market prices, the fundamental risk of future energy shortages persists. The gas supply situation remains unchanged – and with the generally low storage capacity of our hydroelectric lakes, the risk of further dry periods continues to loom.
“This ongoing risk, combined with elevated forward prices and the challenges some retailers face in securing hedges at acceptable prices, has led to caution in acquiring new customers.”
Octopus Energy chief operating officer Margaret Cooney agreed spot prices had fallen but forward prices, which retailers have to pay to secure supply in the future, had not.
She said the cost of energy for independent retailers was above the retail prices that being put into the market by the gentailers.
They were cutting their retail business margins to the point where others could not compete, she said.
“[We need] that opportunity to at least buy energy on reasonable terms and compete otherwise we’re looking at incurring losses and that’s where it’s not an even playing field at the moment.”
Fuge said daily fixed lines charges would increase next year and would add an average $15 a month to household bills.
“At the same time, around 68% of households will see another jump in their power bills because of the ongoing phase out of low fixed charges, which will see impacted bills increase by a further $110 per year. “
rnz.co.nz
