Why do power prices increase?

Why do electricity prices change?

Costs for households are rising, and this may include your power bill. If you’re struggling with paying your power bill, visit our support page to learn about what support is available.

The system that gets electricity to your home is made up of different parts. The electricity is generated at power stations such as hydro dams, then it is transmitted from these power stations through a national grid network to your local area, and then finally it is distributed directly to your house. There are also other parts of the system such as retail teams, metering services, and regulators.

Keeping all these parts up and running to ensure a reliable supply of electricity costs money, and right now the cost of doing this is going up, which is reflected in your bill. Your power bill doesn’t break down of all these different parts of the system, so it might not be obvious why prices are changing.

There are also challenges in electricity generation due to a range of things, such as low gas supply, which has pushed prices up. The good news is that more renewable generation is being built to close that gap. In fact, power companies are investing billions of dollars’ worth of new generation projects such as wind farms and solar farms to ensure they can continue to generate enough power for New Zealand’s future demand.

There’s also been a jump in the cost of distributing energy to your home, so local lines companies can maintain and upgrade things like power lines. You can find out more about this on the EA’s regional pricing dashboard.

Like everything right now, inflation has also impacted pricing.

How do I know if the price of my electricity has changed?

When you sign up to a power company, you usually agree to a set charge for your electricity. If you sign up to a contract, the pricing will stay the same for a fixed term.

Power companies can change their prices, but they must tell you about price increases. There are rules in place that power companies must make it clear how much your electricity prices are increasing by and what impact this is likely to have on your power bill.

Power companies will usually send you an email or provide a message on your power bill if their prices are increasing. If you receive paper bills, they should send you a letter. They will usually give you around 30 days’ notice of these changes.

You might notice a higher electricity bill over winter. This is often because people use a lot more electricity over winter, for things like heating their homes, not because electricity prices are higher. If you think there could be a better deal out there, you can compare different power companies on comparison services like Billy or PowerSwitch.

Am I paying more than I should?

No one likes it when household costs such as electricity go up, and it can put a strain on household budgets.

There are a lot of power companies competing against each other in New Zealand, meaning they work hard to keep electricity affordable and keep their customers happy. But sometimes they have to increase their prices to cover the cost of getting electricity to your house. They also support their customers who are struggling to pay their bills - visit our article about how power companies can support you to learn more.