The Commerce Commission announces that there will be rising costs in the power industry and thus, increasing power bills in 2025.
The Commerce Commission has announced that it will be increasing the amount of money that the national power grid owner, Transpower, and local line companies can make. This is so that they can pay for necessary investment, such as maintenance and upgrades, to New Zealand’s electricity network.
It’s important that the power network is invested in so that it can be “future-proofed.” However, most Kiwis will find little comfort in this, as the investment will cause an increase in already eye-wateringly high power bills. Commissioner Vhari McWha says that while this will increase prices now, if there are any delays in investments, there will be even larger price jumps in the future.
“To help, we are proposing that some revenue is recovered more slowly to soften initial price rises for consumers,” Ms McWha says.
The Commission is seeking a solution to slow this increase down, and the one they have drafted, if approved, would result in an increase of roughly $15 per month for most households from 1 April 2025. However, if this strategy to slow down the increase is not implemented, there could be an average increase of $25 per month.
McWha has said the Commission is on a mission to advocate for the long-term wellbeing of Kiwis. She says that affordable power is a priority. However, investing in the maintenance and upgrading of the power network is an essential part of ensuring Kiwis get the electricity that they need, both now, and in the future. McWha reiterates that by spreading out the investment over time, they can soften the impact of the increased prices.
For Transpower, the Commission is proposing to set the maximum revenue at $5.8 billion for the next 5 years, which is an increase of 43% compared to the previous 5 years. However, with the Commission’s plans, it will spread the increase out and cap it at 15% for the first 2 years.
For local lines companies, the Commission is proposing to set the maximum revenue at $12 billion for the next 5 years, representing an increase of 50%. But again, the Commission’s strategy will mean it will increase by 24% on average for the first 2 years. It will then slowly rise.
The increase in prices reflects the rising costs in the power sector, such as the cost of borrowing, cost of materials, and inflation. It’s also important to note that a lot of parts of the power network were built in the 1960s and 1970s, and are therefore, quite outdated and needing to be maintained and replaced.
The impact of these particular rising industry costs will be felt from April 2025, with the transmission and distribution component of electricity bills set to be increasing.
So, what can Kiwis do to combat rising costs? The good news is that Kiwis can do something about it, to ensure they aren’t paying for more than they need to.
Compare Power Bills
One of the most effective ways to save money on your electricity bill, and combat the impact of rising industry costs, is to compare your power bill with Power Compare. Our user-friendly platform makes it easy and quick to compare plans and providers available to you, so you can find a better deal. Consider securing a 1 or 2 year contract so you can lock in the current power rates before they rise next year.
Reduce Power Consumption
You can also lower your power bill by reducing the amount of power your household consumes. There are plenty of ways to do this. If you have any old household appliances, consider upgrading them to a modern unit. Old fridges, chest freezers, washing machines, and heaters are often culprits to high electricity bills, and you can make a difference by investing in appliances that have high energy efficiency. We have various tips for lowering your power consumption, just click the button below!