13 Jul 2017

Power prices spike as chill sets in

10:37 am on 13 July 2017

Icy conditions have caused electricity prices to increase eightfold, with one Wellington resident swapping the heater for hot water bottles to avoid paying a hefty bill.

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Photo: 123rf

The winter weather has pushed up power usage, at the same time as low water levels in hydro lakes reduce New Zealand's ability to generate electricity.

The vast majority of New Zealanders would have been unaffected since their power bills are averaged out over a long period of time.

But the 23,000 customers of Flick Electric pay spot prices - whatever the market decrees is the right price for electricity at any one time.

Sherilee Kahui of Wellington is with Flick and said her power bills had grown from $30 a week to $100.

"We have started to become obsessive about hot water bottles," she said.

"We have got hot water bottles in our beds rather than having to turn on heaters so much. We also spend time in the same rooms as each other."

Flick insisted its scheme was sound, as people might pay more now but less at other times.

Chief executive Steve O'Connor said his customers were smart, and knew how to manage their accounts.

"Most of our customers realise our model gives them access to the wholesale spot markets," he said.

"Most of the time that market is very cheap. At the moment they can see prices are higher but what they do know is that long run they are better off."

Flick has been growing fast, but has well under a 1 percent market share and admitted its growth had plateaued this winter.

An energy analyst, Bryan Leyland, said it could get a lot worse.

"Because we have been closing down thermal stations we have not got to the situation where we have very little reserve for a cold day like this and next year could probably be worse."

All these problems stems from dry weather that starved South Island hydro storage lakes of water.

NZ Steel and Fonterra chief lobbyist John Harbord said virtually all large companies in New Zealand had taken steps long ago to protect themselves against wildly swinging prices.

"Large industrial and commercial users of electricity understand New Zealand weather conditions and they plan accordingly," he said.

"They will have contingencies in place including hedges against high prices so it is not a major concern yet."

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