Pricing Reform

Pricing Reform

With the emergence of new technologies – solar panels, electric vehicles and battery panels for example – consumers have more choice and control around how they use energy.

While the opportunities presented by these technologies are exciting, the way distribution prices are calculated needs to change. If they don’t, electricity bills for ordinary New Zealanders are likely to increase further over the long-term.

Over the next couple of years, Centralines, in consultation with retailers and consumers, will be looking at the options available to set more fair and efficient pricing for households.

We’ve recently prepared our roadmap to pricing reform to give consumers and the Electricity Authority an indication of Centralines' intended approach to pricing reform, the need for reform and our process for change.

Centralines' move towards service-based, cost reflective prices

Centralines' goal with pricing reform is to introduce distribution prices that are more reflective of actual network costs and the services that consumers receive.

Currently most pricing is based on how much electricity consumers use and does not take into account the time at which consumers use electricity or the capacity required for each consumer when demand on the network is greatest – usually cold, wet, winter evenings. This is where the cost of providing a lines service comes in.

Centralines has already made some progress in introducing more cost-reflective, service-based price offerings:

1. Solar pricing: In April 2016, Centralines introduced a solar/distributed generation price category to reflect the different usage profile of solar consumers.

2. Optional time-of-use (TOU) pricing: In April 2017, Centralines improved its TOU offering by raising the difference between off-peak and peak prices and extended eligibility of this price category for consumers installing solar.

Next steps and feedback

Substantive pricing reform is unlikely to commence until the year beginning 1 April 2020 due to the Commerce Commission’s regulatory requirements associated with price restructuring.

Your feedback is important to us as we consider the best way forward to pay for distribution pricing. Please email us at [email protected] with any questions or feedback.