WEL Networks drops electricity discount, promises to disrupt market

Tuesday, 16 January 2018

WEL Networks is dropping its discount program touting big future benefits for customers. Here, WEL Networks Chris Longley cuts down trees near power lines to prevent power outages during a storm.

WEL Networks is dropping a discount program which will increase power bills by $7 a month.

The Waikato energy infrastructure company intends to cut the discount in 2019, and in place reduce line prices from 2018.

WEL Network's owning trust, WEL Energy Trust, says the move is essential for it to disrupt the regional power market.

WEL Energy Trust chairman Mark Ingle said removing a now irrelevant annual discount was part of a greater plan to reduce prices.

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'What we're wanting to do now is invest in new technologies to make a meaningful reduction in people's bills.'

WEL began providing a yearly discount for growing efficiencies in its network to residential customers in 2003. The discount is marked as credit on a consumers account by the electricity retailer.

Residential customers will continue to receive the $14 million paid in power discounts before the program ends in 2019.

WEL will also reduce line prices by $7m in 2018, and carry this into the future. It is expected retailer will pass this on to the consumer.

WEL Network estimates line pricing makes up approximately 25 per cent of an electricity bill.

Residential customers will pay the remaining $7m of the former discount from 2019. Ingle said this was effectively $7 a month for each residential customer.

'The evidence is really compelling that we need to do things differently,' Ingle said.

'It's also not lost on us that this is a pretty big decision … it's impacting people individually. We have to look at our three criteria: the residential lines customers, the community, and the company being in a position of strength.'

The money will instead be used by WEL Energy Trust to develop technologies which reduce the cost of power to the consumer.

Solar, battery storage, power sharing and power trading have all disrupted the industry, and were all technologies WEL is exploring, Ingle said.

The trust is also in the early stages of working with OurPower, a commercial project in the electricity retail market.

Further details would be announced later in the year.

'We do believe there will be opportunities in the retail space … and we want to be in a position in which we can participate.

'People are getting choice within the sector and we want to ensure that continues.'

WEL Networks chairman Rob Campbell said the discount was a blunt instrument to benefit customers, which limited the company's options.

'We're developing ways to disrupt the sector so total power prices are reduced.'

What is WEL

WEL Networks manages the energy infrastructure of 160,000 Waikato residents.

It is owned by the WEL Energy Trust, which was established by Hamilton, Waipa and Waikato district councils in 1993.

Ingle said WEL Energy, as a trust, can only take a 7 per cent return on investment. It offers millions in community grants every year.