Government levels electricity playing field for consumers

  • Hon Dr Megan Woods
Energy and Resources

Consumers will benefit from changes to the electricity market that will see a level playing field for smaller independent retailers, greater transparency over the big power companies, increased competition in the market and more support for consumers to shop around for better deals, Minister Megan Woods has announced.

The changes include requiring big power companies to sell electricity at affordable rates into the wholesale market to level the playing field for smaller and independent retailers.

This is just one of the changes included in the Government’s response to the Electricity Price Review. The Government has agreed to a work programme that will see 20 of the Review’s recommendations progressed immediately.

“Helping Kiwi families meet the cost of living is a long term challenge for New Zealand. We can’t fix it overnight or in one fell swoop, but there are a range of practical things we can do to tilt the balance in favour of consumers while adding more competition to the marketplace to take pressure of the monthly power bill,” says Megan Woods

“Right now, our electricity system is dominated by a small number of big ‘gentailers’ -companies that generate and sell electricity. It can be too hard for small and independent retailers to compete and survive, meaning fewer choices for consumers and less innovation in the market.  We are changing the market to level the playing field and boost competition.

The changes announced today include:

  • Supporting new and independent retailers by requiring the big power companies to sell into the wholesale market at affordable rates.
  • Extending discount rates to all customers
  • A pilot scheme to help customers who have not switched power providers before to shop around for better deals and requiring power companies to put information about how to switch on the communications they send consumers.
  • Putting a moratorium on “win-backs” that companies use to stop customers switching between providers.
  • Requiring greater transparency on the profits of the big gentailers.
  • Introducing minimum standards for medically dependent and vulnerable customers

“The EPR found that while overall the market is working well, it is not delivering for everyone. Too many people are paying higher bills than they need to and many people struggle with the cost of power, Megan Woods said.

“Our programme will also reform the electricity sector to make it fit for the future – giving consumers better access to emerging technology and increasing New Zealand’s investment in renewable energy.

“We’re also putting the industry on notice - we intend to review these changes in our second term to ensure savings are passed on to consumers. We will be passing backstop legislation shortly to allow the Government to introduce regulations directly when required.

“We will also be requiring retailers to follow Meridian’s lead and change pricing structures to pass discount rates onto all customers instead of relying on hidden late payment penalties. When Meridian did this, it put $5 million back into the pockets of consumers, and the EPR estimates that $45 million would come off power bills when other companies follow suit.

The Electricity Price Review was agreed in the Coalition Agreement with New Zealand First.

Under Secretary for Regional Economic Development Fletcher Tabuteau said, “As the New Zealand First energy spokesperson and Under Secretary for Regional Economic Development, I am pleased to see the review has produced key recommendations to steer our future energy sector.

“New Zealand First has long held a strong belief that electricity, an essential service, must be delivered to all New Zealanders at the most reasonable price that is consistent with the maintenance of a viable industry.

“As a result, New Zealand’s future energy regulatory structure will provide long-term stability and incentives for business to make informed investment and purchasing decisions while ensuring that the needs of every New Zealander are met.”

Minister Woods said, “The changes we announce today sit alongside other actions to help with the cost of living such as the Winter Energy payment to help over a million people heat their homes, the Warmer Kiwi Homes programme which insulates homes to bring down heating costs, giving $75 a week to the average family through the Families Package, increases to the minimum wage, and our economic plan which has delivered the highest wage growth in a decade.”