New Zealanders face power price hike of $1000 a year - Powerswitch

Consumer NZ's Powerswitch has been crunching the numbers and says it has found some power users will be facing price hikes of up to $1000 a year.

The industry traditionally puts its prices up on 1 April every year. Powerswitch said there were a number of ways price rises were hitting consumers this year.

Among them are suppliers phasing out low-use power plans, gas companies being given the green light to charge more, and the actual cost of power and gas rising.

"The electricity industry are gradually putting up the fixed rate that they charge you (for most consumers) starting today," Consumer NZ chief executive Jon Duffy told Morning Report.

"The wholesale market has put electricity prices up but there's also two components to what you pay on your bill, there's the fixed charge and the variable charge."

Duffy said the variable charge was how much per kilowatt-hour the electricity company was charging you and that was what was vulnerable to dry lakes.

The fixed charge is split into low and high user rates. The low user rate is what you pay daily to have a connection. That was the variable that was going up, Duffy said.

"That's what's causing quite a bit of a price shock for people."

He explained how we got to this point.

In 2004, the government was trying to encourage people to use less electricity so they introduced a low user rate to promote energy consumption, he said.

"What's happened in the last 20 years is that we've got more efficient appliances and people have got better at conserving electricity so more and more people have been on this low user rate and it's got to this point now where the industry is struggling to pay for things like infrastructure upgrades and new generation etc - well, that's what we're told anyway."

There needs to be a rebalancing where more people were brought onto the standard rate, he said.

Powerswitch allows consumers to see how much they could save by switching providers. Updated power prices would be available from 4 April.