The astounding difference in electricity prices across New Zealand - the online consumer

The astounding difference in electricity prices across New Zealand – the online consumer

An analysis by Consumer NZ found that areas with lower-than-average incomes pay above-average prices. Larger towns and cities generally pay less. Combined with price increases over the past 20 years, rising electricity prices in lower income areas are contributing to increasing levels of energy hardship and inequality in New Zealand.

The differences between regions can be significant. Prices in Kerikeri (currently the highest in New Zealand) are about 40% higher than for a similar family on the road in Auckland where the average income is about 25% higher. Prices in Masterton are 15% higher than they are over the hill in Wellington. The price in Westport, which has below average income, is about 40% higher than in Christchurch, where the average income is higher.

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A big reason is the differences in electricity delivery costs

With a typical electricity bill, about 40% of what you pay is power line fees. This is the cost of the infrastructure required to deliver electricity from the power plant to your home. Areas with higher energy prices tend to be sparsely populated, far from power plants, or have few large commercial and industrial electricity users. Or in some cases, all of these things.

Basically, areas that need a lot of infrastructure to get electricity, but with fewer people and industry to distribute the cost of that infrastructure, pay more.

Unfortunately, many of these areas also tend to have lower incomes.

Some of this is also structural. We have 28 different power line companies. Some of these networks are large and some are small. If you live in an area served by a small line company, you are likely to pay more than you would in an area served by a larger line company. This is because a large liner company will cover a larger area that is likely to include large population centers and industrial loads. More people and companies to spread line costs lower overall prices.

Puller Electric is one of New Zealand’s smallest power line companies. Buller provides nearly 4,000 residential connections in and around Westport. Orion, the power line company serving Christchurch, has 180,000 connections. In Westport a unit of electricity costs about 40¢. In Christchurch 29 ¢.

Frequency switching also affects prices

Our analysis also found that the places with the highest prices are also the areas where a significant number of consumers never or rarely changed their electric retailer. One electric retailer is likely to dominate these areas. This reduces the competitive pressure that maintains prices.

For example, households in Tauranga are switching power companies roughly 30% less than the national average. Strength of trust dominates this region, with 60% of households registering. Results? Energy prices in Tauranga are about 11% higher than the national average – although it has a large population to spread line costs and is relatively close to power stations.

What can be done to get cheaper electricity rates across New Zealand?

Don’t be static when it comes to your electricity provider. If more consumers compare and change retail electricity vendors regularly, it will not only save them money but also shock some retailers into taking action. More switching is generating competitive pressure on retailers, forcing them to sharpen their pens and offer cheaper prices overall.

If you are looking for the best deal, check out We have a free Powerswitch service. All you have to do is get an up-to-date electricity bill, go to Powerswitch.org.nz, and you can have independent electricity and gas price comparisons in less than 5 minutes. There is likely to be a cheaper deal available to you.

Our analysis of nearly 8000 Powerswitch results pages created during the winter of last year indicated that the average savings switching to the cheapest pricing plan was $380!

That’s a huge chunk of money in anyone’s book.

Notes on the data we used for this article

Representative electricity prices for each location came from the MBIE’s quarterly survey of domestic electricity prices. The MBIE survey finds a representative price for a typical New Zealand bed for towns and cities across New Zealand. Income data was obtained from Stats NZ. Retailer conversion and market share data for retailers were obtained from the Electricity Authority and our Powerswitch information.


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