On the 3rd of October 2019, the government announced changes rising from the Energy Minister’s recent Electricity Price Review (EPR).
20 of the review’s recommendations have been adopted by the Minister and will be rolled out over the next two to twelve months.
The reforms require the bigger power companies (called the “gentailers” – they control approximately 90% generation and retail) to sell power through wholesale channels at affordable rates with the intention that their generation and retail operations operate at arms’ length.
This allows for more competition and independent retailers like Ecotricity to compete in a fair market and offer alternatives..
Other recommendations being progressed include extending discount rates to all customers, requiring more transparency about retail profits from the larger gentailers, and introducing minimum standards for medically-dependent and vulnerable customers.
What will this mean for you?
More choice. More freedom. More transparency about where your money is going.
Energy Minister Megan Woods summed it up perfectly in her statement when she explained how the electricity market wasn’t working for everyone. Many people are paying too much for electricity and consumers were discouraged from making changes.
“We can’t fix it overnight or in one fell swoop, but there are a range of practical things we can do to tilt the balance in favour of consumers while adding more competition to the marketplace to take pressure off the monthly power bill.
“Our programme will also reform the electricity sector to make it fit for the future – giving consumers better access to emerging technology and increasing New Zealand’s investment in renewable energy.”
Minister Woods Saves Kiwi Consumers $45 million
The review also sees incentives like prompt payment discounts passed on to all consumers. The EPR believes that extending these discounts will result in $45 million per year back in the pockets of Kiwi households.
“Win-back” incentives and discounted pricing to encourage leaving customers to stay with a company will also be put on hold. These reward customers who shop around at the expense of loyal customers who stick with the same company. Instead, the EA want to help power users to learn how to shop around and get the best deal. Companies will have to compete with open, transparent pricing that’s the same for all customers.
We’re excited about these changes, as they mean we’re able to help more Kiwis embrace the benefits of renewable energy while keeping power costs low. We’re keen to see the government adopt these changes under urgency – many of the proposed reforms could be implemented before Christmas to immediately put more money into the pockets of families at one of the toughest times of the year.
….. and another $450 million Savings on the Way
Well done again to the Minister banning Prompt Payment Discounts (PPD) which will save $45 million for consumers.
The real savings however will kick in when the wholesale markets force large gentailers to offer all generation into the futures market which will bring down long term costs for all!
It’s a similar move that was forced on the telecom market and resulted in substantial consumer savings and now places New Zealand as one of the most afford telco markets in the OECD.
You can find out more about our plans and thoughts around the EA reforms on our previous blog.