The proposed price rises recognise that assets built last century need to be maintained and replaced and that electricity networks need to grow and adapt to meet population growth and new demands, says commissioner Vhari McWha. Photo: RNZ / Diego Opatowski
Household electricity bills will rise by an average $15 a month next year if Commerce Commission proposed prices are confirmed.
The commission regulates prices and performance standards for national grid operator Transpower and local lines companies, and has just released draft decisions for feedback.
Commissioner Vhari McWha said the higher prices were necessary to fund investment in the electricity network.
"We're conscious that for consumers to get the electricity network they need, more investment is required. That's why we're proposing to increase the amount of revenue Transpower and local lines companies can earn."
She said some of the spending the companies wanted approved has not been allowed for, and the commission has looked to spread out other spending programmes to ease the pressure on households.
"Without the commission's proposal to slow revenue recovery, consumers could be looking at price increases of around $25 per month."
McWha said the raises reflected the cost of borrowing, cost of materials and inflationary pressures.
"It also recognises that assets built last century - many in the 1960s and 1970s - need to be maintained and replaced. Electricity networks also need to grow and adapt to meet population growth and new demands, such as the increasing electrification of transport and industrial process heat."
Who pays what, where
The draft decisions cover 16 lines companies. The others, which are community owned, are not price controlled, but McWha said they were likely to mirror the rises applied elsewhere.
The regulated companies cover about 80 percent of households and the estimated price increases vary between $10 and $20 a month in the first year, with further rises in subsequent years.
Consumers in Auckland, Wellington, and at the top of the South island would face $10 average rises, those in Christchurch, Invercargill, the lower and central North Island and the Bay of Plenty $15, and those in Otago, Canterbury, East Coast, South Canterbury, and Northland $20.
A May 2024 Commerce Commission graphic showing the likely average changes in monthly electricity bills for households, by area, if its proposals are confirmed. Photo: Supplied / Commerce Commission
McWha said the commission was proposing to limit the lines companies to a maximum of $12 billion spending over five years, a rise of 50 percent on the previous pricing period, which would be spread out from 2025 to 2030.
She said some regions had greater needs for investment, and there was also considerable uncertainty about growth.
"For this reason, the commission considers it appropriate to allow less expenditure than these businesses forecast. The limits also reflect a question mark over whether the industry can collectively deliver such a large step change in investment in the coming period as they forecast."
The state owned national grid operator Transpower would be allowed to earn a maximum of $5.8b over the five year period but increases would be smoothed out.
"We are satisfied that Transpower's proposed expenditure in general is underpinned by robust asset management practices and a demonstrable need," McWha said.
