Cost of electricity up 80 percent since 1990 - report

The cost of electricity has skyrocketed since reforms to the sector three decades ago.

New Zealanders are now paying 79 percent more for power than they were in 1990, and we can't blame inflation - those figures are inflation-adjusted.

For 103,000 New Zealanders, the cost of power now dominates 10 percent of their average income. That figure increases to 175,000 households if housing costs are excluded. Those are the Kiwis in "energy hardship", a new Government report has found. The rest of New Zealand spends about 3 percent of their income on electricity.

The Minister for Energy and Resources Megan Woods says the review identified issues that need addressing.

"The report is a clear demonstration that the market is not working for everyone. New Zealanders deserve affordable electricity but too many households are struggling to pay their bills. The next step in this process is a conversation with the public about how we remedy that," Dr Woods said.

Cost of electricity up 80 percent since 1990 - report
Photo credit: Newshub.

As more people move toward solar power, allowing residential and commercial customers to generate power, those low income households may be hit again, possibly leaving those without solar panels bearing "an unfair share of the cost".

The impact of electricty costs on low-income household is an issue that's also been highlighted by Consumer NZ, which says one in five consumers struggled to pay for power in the past year.

Last year, 25,000 people had their power disconnected for unpaid bills, Consumer NZ said.

Cost of electricity up 80 percent since 1990 - report
Photo credit: Newshub.

The large bulk of power generated in New Zealand is from renewable sources - namely wind, hydo and solar - but the sector faces a challenge converting the remaining 20 percent. Meanwhile, it will face increasing demands on power as people switch to electric vehicles.

The review found just one gap that would warrant "altering the functions" of electricity generators - access to the distribution network. The review did say, however, that there could be merit in a single regulator for energy, if future changes to electricity demands it.

The review was part of NZ First's coalition deal with the Government, and has support from the Greens.

"The Greens have long called for a pricing incentive mechanism to encourage households to reduce energy consumption, and for improving the low user tariff to make solar power more cost effective as a benefit," Greens energy spokesperson Gareth Hughes said.

The National Party's Jonathan Young said the report seemed "reasonably objective".

He said higher wages will help low-income households afford electricity.

"We've got to have a really strong economy and we need to see more people in higher-paid work, because to meet those costs for energy is really important for any family."