Electricity Authority proposals threaten Auckland consumer rebates of $18 million

Entrust, the majority shareholder of Vector, is calling on the Electricity Authority (EA) to continue to ensure Loss Rental Rebates (LRRs) can be paid directly to Kiwi households and businesses.

6 October 2022

Auckland consumers in the Entrust district received an additional $30 LRR payment in September, as part of the country’s largest annual dividend to 351,000 households and businesses. For other Auckland consumers, Vector passes the LRR to power companies who should then provide their customers with a credit on their power bill.

LRRs are the difference between the price and quantity of electricity generated and the price and quantity of electricity received, creating a difference in cost.

The Electricity Authority is proposing more of the LRR is allocated to generators with lines companies having to give the rest of the funds to electricity retailers. This means the rebates wouldn’t be passed to end-consumers as they have been by Entrust and Vector.

Alastair Bell, Chair of the Entrust Regulation and Policy Committee, says the priority for Electricity Authority should be to ensure consumers receive all the LRR payments, worth $18 million this year and that these funds aren’t siphoned off by retailers.

“At a time when many people are struggling to manage rising inflationary costs and stressed budgets, the allocation of LRR should be done transparently and be given back to consumers for their long-term benefit and not as a windfall gain to generators which is what Electricity Authority is proposing to do,” says Bell.

Bell adds that LRRs are consumers money, and the current Entrust and Vector arrangements provide the best way of getting this money to the Kiwi families and businesses that need it most.

“Under current regulations, Vector and other lines companies can choose what to do with LRR, including whether it is passed on to retailers or directly to consumers. The Electricity Authority should focus on ensuring transparent LRR pass-through to
consumers, rather than regulation of how pass-through is done or that could block consumers from getting the money,” says Bell.

Bell notes that the Electricity Authority has not given any compelling explanation why consumers should no longer be able to receive the LRR directly.

“Entrust knows that the only guaranteed way that consumers receive 100% of the benefit of the rentals is directly passing the money to them. Naturally, we are keen to hear the EA’s explanation as to why it would be bad for consumers to continue to directly receive the LRR. Entrust believes that this money belongs to consumers and no one else.”