Energy transition should not increase electricity prices

With submissions to the Electricity Authority (EA) regarding future renewable power supply closing today, Entrust has expressed its view that if the energy transition is managed well it should result in lower wholesale and consumer pricing.

6 March 2023

Entrust believes a highly competitive market that delivers affordable pricing is critical for a successful energy transition, and to ensure the electricity sector plays its part in tackling climate change.

If competition issues are not resolved, Entrust maintains that wholesale prices could remain artificially higher than they should, not only undermining electrification of the economy but the provision of affordable energy for Kiwi households and businesses.

“As a consumer trust representing beneficiaries, we are concerned by the clear evidence that consumers are paying too much for electricity”, says Alastair Bell, Chair of Entrust’s Regulation & Policy Committee.

“The Electricity Authority’s investigation into the Tiwai supply arrangements, supported our own previous analysis, which found that Tiwai resulted in Kiwi households paying an extra $200 more than they should every year.”

A recent EA survey of electricity industry participant perceptions provides evidence that Entrust’s concerns are shared by industry and consumer representatives.

Only 32% of electricity sector survey respondents agreed that competition ensures wholesale prices are at an efficient level, with 46% considering prices were higher than they would be if competition was working well.

Only 33% of survey respondents agreed “electricity market settings will support an efficient transition of the energy sector to low emissions” and only 29% agreed there was a level playing field for new entrants.

“Moving to more sustainable energy solutions should not drive prices up, but instead result in reduced wholesale prices and lower prices for consumers. This will require the regulator to ensure new and independent generators are able to compete on a level playing field and offer cheaper, more competitive, environmentally friendly options,” said Alastair Bell.