Power prices are increasing - here’s what you can do

Wednesday, 12 March 2025

While the increase in power prices is a complex issue, there are practical steps you can take to reduce your electricity bills.

Winter is coming, and so are higher power bills.

Electricity prices in New Zealand are set to rise from April 2025, with lines and transmission charges increasing to cover costs for material and labour, higher interest rates, and rising levels of investment in the electricity network. As a result, households could expect to see an average increase of $10 per month in their power bills, though in some regions it could be higher.

This news is particularly unwelcome for households already feeling the pressure of rising living costs. With winter fast approaching and higher demand for power to heat homes up, many consumers will be searching for ways to reduce their electricity bills.

With winter fast approaching and higher demand for power to heat homes up, many consumers will be searching for ways to reduce their electricity bills.

And while rising power prices are expected, understanding the factors behind these increases and how the Electricity Authority Te Mana Hiko (the Authority) works to support consumers can provide clarity and guidance in managing these changes.

What’s behind the rise in power prices?

Power prices in New Zealand are influenced by several factors. While many of these factors may seem out of consumers' control, understanding them can help explain why prices are increasing. Here’s a breakdown of the things driving power costs and this year’s price increases:

Distribution & Transmission: A large portion of power bill increases comes from distribution and transmission costs. This covers the infrastructure needed to deliver electricity from the generation source to your home. Although regulated by the Commerce Commission, recent increases in this area stem from several factors such as the rising cost of maintaining and building new infrastructure.

Generation costs: Generation costs are driven primarily by supply and demand. Wholesale electricity prices fluctuate based on weather patterns, such as droughts or high rainfall, as well as the cost of fuels like natural gas and coal. Most consumers are protected from extreme changes in the wholesale electricity price by purchasing electricity from a retailer. While there are clear long-term benefits to new investment in renewable energy technologies, this has also contributed to upward pressure on prices in the short-term.

One of the other effective ways to save on energy costs is by adopting energy-saving habits at home.

Retail costs: Retail costs are influenced by various operational expenses, including marketing, customer care, billing systems, and regulatory compliance. Other contributing factors include inflation, wage increases, and fluctuating exchange rates.

Other costs: This includes costs for metering equipment, market services, and governance. While these are smaller compared to the other components, they still contribute to your overall electricity cost.

The role of the Electricity Authority

The Electricity Authority plays a vital role in ensuring New Zealand’s electricity market functions fairly for consumers. While it doesn’t directly regulate power prices, the Authority works to achieve a competitive, reliable and efficient market, and to protect consumers’ interests.

A key responsibility is monitoring the retail market, ensuring that energy companies operate transparently and are held accountable. By promoting transparency, the Authority empowers consumers to make informed decisions and manage their energy usage effectively.

The Authority also encourages competition within the market, which incentivises companies to improve services and keep prices reasonable.

At its core, the Authority is committed to protecting consumers.

The Authority has introduced new rules power companies must follow to ensure all households in New Zealand receive a consistent and supportive level of service from their retailer. It is also closely watching price increases and improving communication about prices rises and what consumers can do about them before they arrive to help prevent ‘price shock’.

Practical solutions for managing rising costs

While the increase in power prices is a complex issue, there are practical steps consumers can take to reduce their electricity bills.

Most people could save by checking they’re on the best deal out there. The Authority funds a free and independent tool for comparing your power plan with other available plans and to help you switch if the tool finds you can save money.

One of the other effective ways to save on energy costs is by adopting energy-saving habits at home. Consumer NZ offers a comprehensive guide with expert tips on reducing power usage, such as optimising heating, using energy-efficient appliances, and reducing overall energy consumption during peak times. The Electricity Retailers’ Association of New Zealand (ERANZ) also provides some excellent information to help consumers.

Consumers can also discuss concerns about their electricity bills with their retailer, including whether they are on the best plan for their needs. Don’t wait till winter to take control of your power use and costs. By making small changes now, you can avoid being caught off guard by high bills in the colder months.