Consumers may need to wait until 2027 for power prices to fall, Meridian suggests

Thursday, 23 July 2026

Meridian Energy isn’t ruling out reducing consumers’ electricity charges in the wake of a steep drop in wholesale power prices and forecast net profits totalling just over $2 billion in three years.

But the company suggests any price drop is unlikely to happen before April next year, if at all.

Mike Roan, chief executive of the country’s largest power firm, told the NZX last week that forward prices for electricity ‒ the prices at which buyers can effectively lock in supply over the next few years ‒ had plunged by between 15% and 35% since April.

Futures prices quoted on the Australian Securities Exchange through to the end of 2029 currently range between about 6 cents and 16c a kilowatt-hour, depending on the time of year power needs to be supplied.

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The wholesale price drop has been attributed to a number of factors, including wet weather that has seen lake levels rise to near-record levels, the forecast El Niño this summer that should bring more rainfall to the southern lakes, and an increased volume of renewable electricity that is expected to come online.

Energy Minister Simeon Brown has also suggested prices may have been dampened as a result of the Government’s planned support for an LNG import terminal.

Transpower reported today that hydro lakes were sitting at 134% of their historic mean for the time of year, which it described as “well above average”.

The wholesale price movements are being reflected in the prices at which businesses can purchase electricity.

Roan told The Post about half of Meridian’s commercial and industrial customers that had renewed contracts since the start of May had seen reductions “of up to 30%”.

“We expect to see more of this moving forward,” he said.

But he indicated the country’s largest power firm only expected changing wholesale prices to flow through to consumers when Meridian next reset its residential charges, which it typically does once a year, in April.

Even then, Meridian said it was “too early to say” whether it might reduce power prices by enough to offset any increase in lines company charges, which come through in household power bills but which companies such as Meridian don’t control.

The four major gentailers are expected to report bumper profits when they release their annual results next month, after posting a 42% jump in their combined interim operating profit, to $1.85b, in February.

Forsyth Barr forecast today that Meridian’s net profit for the year to the end of last month would jump by 93% to just over $653m, and that its profit would continue to rise to $692m next year and to $721m in the year to June 2028.

It forecasts Contact Energy’s profit will rise by 35% this year to reach $532m.

Finance Minister Nicola Willis stopped short of calling for an immediate consumer price cut when commenting yesterday on an increase in inflation to 4.1%, while making clear pricing concerns had led it to “beef up” the industry’s regulator, the Electricity Authority.

Brown appointed John Harbord, the highly regarded former chairperson of the Major Electricity Users Group, to chair the authority last week.

The main driver for the jump in inflation was higher petrol prices, but Stats NZ identified a 12% annual rise in the price of electricity as one of a few secondary factors.

Willis acknowledged electricity prices had become “a pain point” for consumers and said the Government was doing “everything in our power to bring them down in future”, including easing consents for new power plants.

“We are seeing wholesale electricity prices are now coming down … and we do expect to see that being passed through to consumers,” she said.

Entrust, the majority owner of Auckland lines company Vector, said in a statement today that the electricity market was “failing consumers”.

Chairperson Denise Lee said the Electricity Authority had been too cautious in addressing structural failings in the market, resulting in the need for government intervention.

Karen Boyes, chief executive of the Major Electricity Users Group, said falling wholesale prices were welcome.

But she said it was ironic that many businesses might have missed out on recent price drops if they had followed the advice given to them by gentailers in the wake of the 2024 power crunch by locking themselves into fixed long-term contracts.

Some of its own members were on 10-year contracts, she said.