29 Jan 2014

More electricity retailers likely to enter market - authority

7:12 am on 29 January 2014

The Electricity Authority says there is renewed interest from potential retailers looking at entering the electricity market.

On Tuesday, the authority released analysis which found that, historically, since the 1970s, consumers haven't paid enough for their electricity.

The report says commercial consumers have paid a high proportion of the costs to supply them, whereas households paid a low proportion until the 1990s.

The rises to household electricity prices in the 2000s reflect increased fuel costs, a hike in GST in 2010, and recent increases in transmission and distribution charges.

Electricity Authority chief executive Carl Hansen says that current charges are almost in line with the costs that were actually incurred to supply electricity.

He says new entry generation costs are likely to be lower than historical generation costs and the barriers to entry in the retail market are quite low, making it more competitive to the benefit of the consumer.

Mr Hansen says there are 75 separate generating entities in New Zealand and 13 generators are directly connected to the national grid.

He says although the authority is looking at the level of competition among retailers the main focus in New Zealand is likely to be on retail competition.

"We have currently 14 independent retailers, I know of nine other parties that are talking to the Electricity Authority about entering the market, two of them I think will definitely go ahead this year."

Mr Hansen says it's an evolving market and with the flat cost of supply, the cost of new entry has been flat over the last 18 months, prices have come down in the wholesale markets.

He says it's no surprise to see this renewed interest in retail entry which will bring benefits for consumers.