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A consumer watchdog is challenging Meridian Energy’s claim that households are spending proportionally less on their power bills because electricity prices are not rising as fast as other expenses.
Meridian released its annual report on Wednesday, showing a net profit more than 4.5 times greater than last year.
But while big manufacturing companies like Panpac and Winstones have shut down production to cut costs, most households are yet to see big bumps in their power bills.
That is according to the companies that generate and sell electricity – commonly referred to a gentailers.
Despite its massive profit, Meridian’s chief executive Neal Barclay told RNZ the percentage of household spending being directed at power bills had actually gone down over the past decade.
“For most residential customers, the price of electricity over the last 10 years has not gone up at the same rate as inflation, so what we do know is electricity as a percentage of many households’ overall income has actually gone down.”
But the powerswitch manager at Consumer NZ, Paul Fuge, said that was not the full picture.
Forty percent of any power bill was made up of lines charges, he said, which were subject to regulation from the Commerce Commission, and only changed every five years.
“The prices were set in a low inflationary period,” he said. “So what that means is the lines charges in the last five years have served to flatten the overall electricity price.”
When they do reset from next April – simply to keep pace with the rising costs faced by lines companies – Fuge said power bills could go up on average about $200 a year.
Other factors were also keeping power bills down: households were using less electricity, with appliances becoming more efficient and families getting smaller.
“On average, household consumption is dropping, and that means even if prices go up, overall costs can go down, proportional to other things.”
It was like getting a smaller car – you spent less because it was more efficient, not because the price of petrol had dropped.
And more concerningly, he said, 11 percent of people reported purposefully under-heating their homes to reduce their power bills.
“That’s a worry when it’s things like heating.”
And he warned power retailers could not keep their prices low forever.
As they repurchased power hedges – that is, locking in power at a certain rate for the next few months – the wholesale cost of electricity would begin to push prices higher for more and more households.