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Will power prices rise in 2020?

Monday, November 18, 2019
Will power prices rise in 2020?

Will Power Prices rise in 2020? The jury is out, but it looks like they might. Here’s how you can get ready to lower your power bill for 2020.

The government recently announced a raft of changes in their Eletricity Reforms, all intended to lower power prices. However industry insiders say that electricity rates are likely to go up before they come down.

"We normally see a round of price reviews in April in line with the network pricing," said Murray Dyer, founder and CEO of Simply Group, an energy consultancy firm. "I think given where wholesale prices have been tracking in the last 12 months with the Pohokura gas outage, I'd be surprised if we don't see some price increases needing to flow through."

This was already visible to large commercial customers whose multi-year contracts have expired and are being renegotiated with higher prices, Dyer said.

But the government disagrees

However, Energy Minister Megan Woods pushed back on that. In Parliament in October, she told Young that "there is no reason to think that higher wholesale rates will necessarily flow through to retail rates. I remind that member again that it didn't in 2017 when we saw prices in the $300 range per megawatt hour."

"I'd also like to tell that member that I am confident that we will see price drops, because as I told him in the answer to the primary, we have already seen $5 million flow back into the pockets of consumers, and the Electricity Price Review said that if all companies do away with their late payment fees, we could see $45 million flow back into the pockets of consumers."

Government reforms

The Government’s Electricity Reform will also be kicking in over the next few months. Two key changes that will effect NZ power consumers are:

  • A proposal for a 180 day ban on win-backs - meaning your old power company won’t be able to offer deals to ‘woo you back’ if you decide to leave. The Government hopes that preventing electricity companies from offering incentives to recover lost customers will motivate them to offer more competitive pricing to all their customers in the first place – including to those who can't be bothered to shop around for electricity.
     
  • Power companies have 6 months to ban prompt payment discounts before the government steps in to regulate. Electricity companies have been given six months to reduce the penalties on customers who pay their bills late, before the Government decides whether it needs to step in. Energy Minister Megan Woods said last month that "prompt payment discounts" offered by power companies amounted to "hidden late payment penalties" for those who didn't get them.

The Electricity Price Review released by Woods last month estimated that consumers would be $45 million a year better off if power companies normalised pricing at the discounted level and only charged late-payers "reasonable fees" for the costs of chasing late payments.

There’s never been a better time to keep on top of your power bill

There is no doubt that consumers are facing a lot of change and uncertainty when it comes to power. A practical first step is to compare power plans today to make sure you are on the best power plan for you.

Compare Power Plans

 

 

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