Energy reform has to go beyond cheaper off-peak power
Photo:
123rf
Opinion -
The
spotlight is again on New Zealand's energy sector
, with a group of industry bodies and independent retailers pushing for a market overhaul, saying the sector was "broken" and "driving up the cost of living".
The Commerce Commission and the Electricity Authority has already established a
joint taskforce
, after prices peaked in 2024, to investigate ways to improve the performance of the electricity market.
The
Authority recently announced new rules
requiring larger electricity retailers to offer lower off-peak power prices from next year. The government is also expected to make further announcements on the sector.
But the question is whether these changes will do enough to help New Zealanders live affordably in dry and warm homes.
Some
30 percent of households face energy hardship
. This means they struggle to afford or access sufficient energy to meet their daily needs.
Caused by a combination of
poor housing quality
, high energy costs and the specific needs of vulnerable residents, energy hardship can lead to
serious health issues
and
high hospital admission costs
.
We know from our own
research
over the past 18 years that
having power disconnected
can negatively affect health and wellbeing.
People have told us that not being able to afford enough power to keep warm made them more likely to get sick and exacerbated existing health conditions. They described mental distress from unaffordable electricity and the threat of disconnection.
Research participants used words such as "stressed", "anxious" or "depressed". They also spoke about having to choose between food and power bills.
If power is disconnected, there can be
additional costs
from losing food in the fridge and freezer, as well as the problem of paying disconnection and reconnection fees when people already can't afford the bill.
People have said not being able to afford enough power to keep warm made them more likely to get sick and exacerbated existing health conditions.
Photo:
123RF
In 2024, a "dry year" that increased the value of hydro generation, combined with lower-than-usual wind and declining supply of gas, resulted in
wholesale electricity price spikes
. But these
winter shortages aren't the only factor
pushing up power bills.
Electricity bills reflect several costs along the supply chain from generation to getting the electricity to the sockets in our homes. A
new regulatory period for lines charges
from April 2025 increased bills by $10 to $25 per month, depending on where you live.
At the same time,
low fixed daily charges are being phased out
. This means the cost of being connected to the grid is the same no matter how much power is used.
It is the poorest New Zealanders who are being hardest hit. The lowest income households
spend a bigger proportion of their income
on power compared to higher income households. Having
electricity prices increase faster than inflation
will put even more families at risk.
The average household electricity bill was
up 8.7 percent in May 2025 compared to June 2024
. According to a recent
Consumer NZ survey
, 20 percent of respondents said they struggled to pay their power bill in the past year.
The new
Consumer Care Obligations
might help reduce some of the risks. Power companies must now comply with these obligations when working with households struggling to pay their bills, are facing disconnection or have someone in the home who is medically dependent on electricity.
If households feel their power company is not meeting these obligations, they can contact
Utilities Disputes
, a free independent electricity and gas complaint resolution service, or the
Electricity Authority
.
But multiple changes are needed to address the different parts of the energy hardship problem. Improving home energy efficiency through schemes like
Warmer Kiwi Homes
is crucial.
Introducing an
Energy Performance Rating
for houses would make it easier for home buyers and renters to know how much it will cost to power a home before they move in. This would also help target energy hardship support.
The government can also make electricity more affordable by supporting
not-for-profit power companies
. Another good move would be to help more households to
install rooftop solar
by providing
access to long-term low-interest finance
.
Lower prices during off-peak hours are a good start. But it is clear the sheer size and complexity of the problems mean government action, with community and industry collaboration, needs to go beyond slightly cheaper electricity when there is less demand.
Kimberley O'Sullivan is a Senior Research Fellow, He Kāinga Oranga - Housing and Health Research Programme, University of Otago.
-
This story
originally appeared on The Conversation.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
15 minutes ago
- Scoop
Surcharge Ban May Shift Costs Rather Than Eliminate Them
Hospitality NZ supports the Government's proposal to ban surcharges on card payments, but cautions the move could result in increased costs being absorbed into general pricing for many hospitality businesses. The Government has announced that the Retail Payment System (Ban on Surcharges) Amendment Bill will be introduced by the end of 2025, with the ban expected to come into force by May 2026. It will apply to most in-store transactions using domestic Visa, Mastercard and EFTPOS. Steve Armitage, Hospitality NZ's Chief Executive, says: 'We appreciate the intent behind this change. Simplifying the checkout experience for consumers is a positive step.' 'But at the same time, it's important to recognise that electronic payments come with real costs to businesses. If surcharges are removed, many operators will have to adjust their pricing to reflect that – particularly for small hospitality operators already under pressure.' The Government estimates the move could save consumers up to $150 million a year, including $65 million in excessive surcharges. However, Hospitality NZ notes that these savings will depend on how businesses respond and whether cost recovery mechanisms remain viable. Steve Armitage continues: 'Margins across the hospitality sector remain very tight. Some operators may be able to absorb the cost, but for many, particularly smaller businesses, that won't be realistic. These businesses may have no option but to reflect those costs in their pricing.' Hospitality NZ welcomed the Commerce Commission's recent action to reduce interchange fees – a major component of payment processing costs – and supports further efforts to ensure banks and payment providers pass those savings on to merchants. Steve Armitage says: 'The reduction in interchange fees is a helpful step, and we'd like to see more transparency in how those savings are shared. 'Our priority is to make sure that any changes introduced are sustainable for hospitality businesses and ultimately deliver a fair outcome for both consumers and operators.' Hospitality NZ looks forward to engaging constructively with the Government as the Bill progresses and to ensuring practical support is available for hospitality businesses adapting to the new framework.
RNZ News
33 minutes ago
- RNZ News
Carpet maker Bremworth rebuilding Napier yarn plant
Carpet maker Bremworth is rebuilding its Napier yarn plant that was destroyed in Cyclone Gabrielle, which means 40 more jobs will be on offer. Before the flood it employed about 150 staff at the Napier factory, but most of them lost their jobs. For the last couple of years Bremworth has been importing yarn to bolster supplies from its Whanganui spinning plant. Bremworth CEO, Craig Woolford spoke to Lisa Owen. To embed this content on your own webpage, cut and paste the following: See terms of use.
RNZ News
an hour ago
- RNZ News
One year, 27,850 jobs gone Stats NZ latest data shows
Photo: 123RF New data shows there were 27,850 fewer jobs in New Zealand in June compared to the year before, and young people are feeling the impact of the weak labour market . Stats NZ's latest data shows the number of filled jobs was up 0.1 percent month-on-month but down 1.2 percent year-on-year. Compared to the year before, construction had lost 12,169 jobs, or 6 percent, manufacturing 5850 jobs, or 2.5 percent, professional, scientific and technical services 5150 jobs, or 2.7 percent, and admin and support services 4860 jobs, or 4.7 percent. Education and training and primary industries added jobs. People aged 15 to 19 had 10 percent fewer jobs, those 20 to 24 had 3.5 percent fewer and those ages 25 to 29 had 3.9 percent fewer. Hugh Hawkins, 23, has been looking for a job since finishing an honours degree last year. "Now we're in late July and I've managed to find a tiny bit of casual work through connections of people I know. Otherwise I've been serially ghosted with absolutely no success." Hawkins had set a target of 10 applications a week. "A couple of jobs I was excited for, I felt genuinely directly qualified for, I've gone for and not reached the interview stage. The rejection email often comes with a total of applicants they've had and one I was qualified for had 630 people apply." It seemed a widespread problem, Hawkins said. "Chatting to my coworkers they're virtually all in the same situation. They have to rely on the benefit to pay rent with casual work on the side. People from different walks of life, most young and very qualified…I worked hospitality roles through uni and took volunteer roles and internships relevant to my degree to set myself up as well as possible… if I'm struggling it must mean terrible things for what other people are also going through." Infometrics economists noted that May's month-on-month increase in filled jobs had been revised down in the latest data to a decline. "June's narrow rise could also be revised to flat or negative growth in future releases." Auckland had a 1.9 percent year-on-year fall in filled jobs and Wellington was down 2.3 percent. Canterbury was up 0.1 percent. ASB senior economist Mark Smith said it had been noticeable in the last year or so that young people were being most affected. He said there were likely to be more job losses than the data indicated because some businesses would have added roles during the year. "This is normally a cyclical phenomenon. The hope is that some will go into training if it's available but it's not available for everyone. "The labour market tends to be the last thing to move." He said it was concerning that the revisions in the data in recent months had all been down. "The trend is still falling. It has dragged on… Covid was huge and there are hangovers from that." He said the unemployment rate was likely to move higher in the coming months. Some people who had lost work had dropped out of the labour market, which meant the participation rate fell. The unemployment rate only counts people looking for work. "If that participation rate did not keep falling we would have a much higher unemployment rate, it would be closer to six. "Really the primary sector and the South Island are the good news stories. There is weakness still in the goods sector and the major centres." BNZ chief economist Mike Jones said he still expected the "mid-year activity air pocket" would pass. "The underlying drivers of the recovery remain in place and should reassert themselves in coming quarters. "But the recent weakness does push back the likely timing of the eventual labour market recovery. We doubt the current undershoot of firms' labour requirements relative to worker availability will change appreciably this side of Christmas. Our forecast peak in unemployment has been shunted out to 5.4 percent in the final quarter of the year. Wage growth should thus continue to slow through to the middle of next year." Green Party spokesperson for social development and employment Ricardo Menendez-March called on the government to "take charge and create jobs that help us build a better future". He said the Green Job Guarantee in the party's alternative budget would create 40,000 jobs to rebuild infrastructure, restore nature and build state housing. "We know people out there need opportunities, instead they are being punished and pushed into poverty."
