Article by Susan Edmunds
Are you curious about whether your electricity bill is considered “average”?
This month, many households have seen increases in their power bills due to new lines charges and other price adjustments.
However, the amount you pay also varies depending on where you live.
To determine what is considered a “normal” power bill, RNZ analyzed a hypothetical household of four people with full insulation, using electricity for heating hot water and a heat pump. The calculation assumed that someone is home during the day, and the household does not have bundled deals.
According to Powerswitch data, this type of household could pay anywhere from $225 for a month of power in April in Wellington City to $325 in Buller.
The primary factor contributing to the disparity in power bills is the cost of supplying power to homes.
Regions such as Kerikeri, Balclutha, and Gisborne generally have higher overall bills, partly due to the higher lines charges.
Ministry of Business, Innovation and Employment data for the three months to February revealed that Kerikeri had an average retail electricity cost of 45.42 cents per kWh, compared to 34.23c on Auckland’s North Shore and 32.05c in Wellington City.
Paul Fuge, the general manager of Powerswitch, explained that the cost of delivering power to households accounts for about 40 percent of a typical bill.
For example, in Kerikeri, the lines component is 19.4c per kWh, and the “energy and other” component is 26c. On the North Shore, these figures are 11.9c and 22.3c, respectively.
In Balclutha, the lines component is 18.9c per kWh, with energy at 25.6c, while in Gisborne, the split is 15.9c and 24.78c. Westport had the highest energy component at 27.7c, with lines charges of 17.7c.
According to MBIE, Cromwell had the highest lines component at 20.5c per kWh.
Fuge noted that regions requiring significant infrastructure for power delivery but with fewer residents and businesses to share the cost tend to have the highest lines charges. However, these areas often have lower incomes.
Daniel Griffiths, the Electricity Authority manager of retail and consumer policy, concurred that the primary driver of regional differences in average power prices is the cost of power delivery.
He emphasized that lines companies play a crucial role in transmitting power from major pylons to homes, and this cost accounts for the price discrepancies consumers face.
Griffiths explained that a typical power bill consists of 32 percent for generated electricity, 13 percent for electricity companies’ costs, a quarter for distribution charges, 10 percent for pylons, and additional components like GST.
He highlighted that while there is some variance in the cost of electricity generation, the significant differences stem from regional disparities in power delivery through lines companies.
The Electricity Authority is closely monitoring the costs consumers incur, particularly in light of recent decisions by the Commerce Commission allowing transmission infrastructure upgrades, which could increase average monthly power bills by $10 to $25.
Griffiths stated that most consumers experienced price hikes on April 1 and that the Authority is committed to ensuring consumers receive fair treatment and adequate support from retailers.
Fuge referenced a Consumer NZ survey indicating that only 2 percent of respondents reported monthly power bills below $50, with 50 percent falling within the $101 to $200 range. Additionally, one percent paid over $400 per month.
He noted that factors such as household size, dwelling type, and appliance usage influence the magnitude of power bills. Monthly bills also fluctuate seasonally, typically higher in colder months but increasingly so in hotter regions with the prevalence of air conditioning.
Fuge pointed out that April often sees power bill increases due to Transpower’s cost pass-through to local lines companies and ultimately consumers.
He explained that Transpower notifies lines companies of price changes by December 31 each year, with new charges taking effect on April 1. This alignment in price adjustments aims to streamline notifications and avoid multiple changes for consumers.
However, when power companies implement price hikes in a single adjustment, it can be challenging for households to discern the driving factors behind the increase.
The pricing analysis is based on a three- or four-person household using power for hot water heating and a heat pump for climate control in a fully insulated home.
