Hundreds of thousands face steep increases in gas and electricity bills

Tuesday, 11 October 2022

The rising price of carbon credits is the main reason gas bills are rising as fast as they are, Genesis says.

Genesis and Contact Energy customers will see their gas bills rise by an average of about 11% next month, if they are not temporarily protected by being on fixed-term contracts.

Contact Energy is also increasing the price that more than 200,000 of its customers pay for electricity by an average of about 8%.

An email received by one Contact customer showed their daily and variable gas charges rising by 19.5% on November 1, but the company said that increase would be at the extreme end of its price changes.

* Price of gas connections to rise by $190 over next four years

Genesis Energy chairwoman Barbara Chapman and chief executive Marc England dismiss the idea of nuclear power in NZ at the company's annual meeting in October 2021.

* Could this five-minute job cut your power bill by $600?

Deborah Hart, who chairs the Consumer Advocacy Council, urged power companies to be “really mindful” of the impact price rises had on consumers and said it would be keeping a close watch.

The council was set up by the Government to advocate for consumers on electricity industry matters.

“Our message to retailers is they need to be really open with consumers about why price rises are justified now,” Hart said.

Genesis reported a 600% increase in its annual profit in August, but said its gas prices would go up by an average of 10.5% from November 7.

Chief customer officer Tracey Hickman indicated that its costs had risen by a larger sum than the extra revenue it would receive from its price rise.

“Not all cost increases have been passed on as we are mindful of the current cost-of-living challenges,” she said.

Hickman declined to give a detailed breakdown of Genesis’ costs “for commercial reasons”, but said it had seen increases in all its line items.

The price that gas lines companies such as First Gas can charge for piping gas to 300,000 North Island homes is rising by an average of $48 per year per houseold over each of the next four years as a result of a regulatory ruling in May.

That increase alone would be sufficient push the average gas bill up by about 3.8% this year.

But Hickman said the connection charge was one the smallest parts of customers’ bills.

Some households are facing a 19.5% rise in gas prices next month.

Carbon costs had increased 48% in the 12 months to September, she said.

“This is a key driver of the gas price increase. It’s also a sign that the Emissions Trading Scheme is doing its job,” Hickman said.

“As the cost of carbon rises, the cost of carbon-emitting energy sources increases. That will in time encourage more consumers towards lower-carbon electricity and away from higher carbon gasses, which is one of the intentions of the ETS.”

Contact Energy said its gas prices were rising by 11% on average from November 1 and its electricity prices by 8%, for customers who were not temporarily shielded by being on a fixed-price contract.

Chief retail officer Matt Bolton said those figures were “very much averages of averages”.

Its electricity pricing had been impacted by rising wholesale prices, including a 60% increase in wholesale futures prices priced-in for next September.

“We are also seeing increases in gas and electricity network charges, carbon pricing and international commodity prices,” he said.

Electricity network companies had increased their charges by up to 12% in April and others had signalled further significant increases from April next year, Bolton said.

“It is fair to say we are seeing a trend of upwards costs across the board and our price change activities are in tune with these predictions.”

Contact Energy reported a small dip in its annual profit in August.

The Major Electricity Users Group assessed earlier this year that, unlike majority state-owned power giant Meridian, Contact had shown no evidence of earning excess profits from its business over the past several years.