The charges for delivery of electricity (a.k.a. lines charges) include the cost of providing local networks and the transmission grid, and are published by local network companies, typically from 1 April for the year ahead. Now that the dust has settled from the most recent round of price adjustments, let’s take a look at what’s happening to line charges in major centres around the country.
By Paul Chapman, 5 May 2017
A little background to start with. Data from the Ministry of Business, Innovation and Employment (MBIE) shows that over the decade from May 2006 the price of electricity delivered to NZ homes has risen by 48% nationally in nominal terms.
Interestingly, over the same period, the lines component increased by 58%, raising the lines proportion of total cost from 38% to 42%.
So, is the trend continuing in 2017?
In Central Auckland, the line charges have increased by around 2% for domestic supply, mostly due to a 2.7% increase in the volume charge (c/kWh). For larger consumers, the picture is mixed, with volume charges dropping by around18%, offset by rises in peak capacity and demand charges of 10-11%: a clear shift toward a capacity-based charging strategy.
After a general 4.15% increase in line charges last year, Wellington Electricity this year aimed to keep charging steady; and most charges have indeed remained unchanged. One notable exception are significant increases in capacity-based charges for the largest class of consumers.
In Christchurch, Orion has kept general line charge increases below 2%, but has significantly increased the nominated demand charge introduced for the 2016/17 period.
Likewise, Aurora in Dunedin has kept increases under 2%, with only capacity-based charges for some of the large consumer classes showing an increase of close to 4%.
In summary then, for the main centres, this year’s line charge increases are more or less in line with CPI, and clear a trend towards capacity over volume-based charging is emerging.
MBIE will publish its next quarterly review of electricity prices later this month, which will show much rate rises in all regions of the country contribute to the total cost electricity for an average domestic consumer.