Grave concerns about sharp power price increases were raised during a Grey Power meeting with the Minister for Energy, Simon Watts in November last year.
Referencing data which showed electricity prices rose 11 percent in the year ending September 2025 – the highest increase since 1989 – Grey Power delegates said that the phase out of the low user fixed charge meant Grey Power members were experiencing increases greater than this historic high.
Grey Power said the Minister should:
A) Index the winter energy payment to energy inflation
Given that the winter energy payment is targeted, Grey Power recommended that it be indexed to the household energy sub-component in the consumers price index, or to MBIE energy price data. Indexation would then align increases in power and gas prices with the winter energy payment.
Unfortunately, when asked to raise this option during budget negotiations, Minister Watts said that there were no plans to adopt this approach.
B) Make shareholders in Transpower and lines companies contribute toward expanding their regulated asset bases
Transpower and the 17 fully regulated lines companies are permitted to spend $16 billion in the five years ending March 2030. This is a 50 percent increase from the previous five-year regulatory period.
This spending expands the regulated asset bases of these companies, which creates bigger companies potentially worth more if sold by the shareholders. Larger asset bases also allow companies to pay larger dividends to shareholders, and higher wages to senior staff.
Under the current regulations, lines companies can recover all the money to fund expansion from customers.
The delegation led by national president, Gayle Chambers said this was likely to mean higher prices for Grey Power members.
Delegates suggested that rather than customers paying for growth, shareholders, who were invested in these companies, should also contribute through equity or debt. This would be the same as private companies raising equity or debt to grow and increase market value.
Increasing the pressure on shareholders would force companies with lazy balance sheets to consider new options, such as amalgamations, and working together to reduce costs and raise equity or debt.
Mr Watts said that many lines companies were owned by community organisations and councils. Asking them to contribute more of their own money could result in them wanting higher returns, which would also push up prices.
C) Keep an open mind on the future
Transpower has forecast electricity generation will increase 68 percent by 2050. According to a Boston Consulting Group (BCG) report for gentailers, delivering this future will require an unprecedented investment of $42 billion in the 2020s. Investment in networks will climb to $101billion by 2050, BCG predicted.
The Minister was asked to consider the possibility that electricity generation will NOT rise by such significant amounts, and therefore NOT require this scale of investment.
This opinion was based on the fact that the industry has wrongly forecasted in the past – the Glidepath strategy of the early 2020s predicted electricity networks would not be needed so little was invested in their upkeep.
The results were suboptimal for customers, as lines companies had significant reliability problems in the 2010s and were forced to play ‘catch-up’ for previous inactivity.
In 2018, Transpower predicted electricity demand would grow by 2025, but instead demand was flat.
On other issues:
Energy efficiency
There was broad agreement on the need to encourage energy efficiency. The Minister reminded Grey Power of the criteria for accessing grants under the Warmer Kiwi Homes initiative – a home built before 2008, a SuperGold combo card, no home insulation, and limited heating options.
Rates Assistance Scheme
The Ratepayer Assistance Scheme (RAS) is a new local government-led, low-cost loan scheme which helps ratepayers manage upfront council charges such as rates, development contributions/levies, and property upgrades by converting them into affordable payments over a longer period of time.
Grey Power supports the RAS, which is in the process of being established through legislation.
Future meetings
The Minister invited the Grey Power delegation, which also included off-board energy chair, Graeme Peters and national secretary, Margaret Sole, to see him again in six months. He also offered to write an article for Grey Power magazine regarding eligibility for the Warmer Kiwi Homes scheme.