1 Aug 2014

Power demand down, but prices up

8:42 am on 1 August 2014

Electricity demand has fallen for the third year in a row - yet prices have continued to rise.

Genesis Energy's Tekapo B Power Station.

Genesis Energy's Tekapo B Power Station. Photo: GENESIS ENERGY

The latest government figures show residential demand for electricity fell 3.7 percent between 2011 and 2013 but prices jumped 6 percent during the same period.

Green Party energy spokesperson Gareth Hughes said that showed consumers were being ripped off.

"Any student who studied economics 101 should know when demand drops, prices should drop. But what we see here is consumption across the country falling but prices are going up and up," Mr Hughes said.

The solution was reforming the electricity sector through the Green-Labour New Zealand Power scheme, he said.

"Kiwis who are opening up their power bills this winter are really struggling in real energy poverty... the number of electricity disconnections rose by 42,000 last year."

But Energy Minister Simon Bridges said the left bloc's electricity plans would only make matters worse

"The only places in the world where they have done the Labour-Greens plan, it has been an abysmal failure."

Mr Bridges said there was an explanation for the disparity between demand and prices - power companies were passing the cost of a $5 billion investment in upgrading powerlines and cables on to consumers.

"So although demand is down, those increased costs in the regulated part of the energy price are coming through and are driving the small price increase that there is here at the moment," he said.

Energy analyst Molly Melhuish said that was true until recently but this year transmission cost made up only 20 percent of the price rise.

"So really it's the energy part of the bill - that is the power stations and the retailing - that are the main cause of the price increase this year," she said.

The report noted part of the reason demand was dropping was due to changes in consumer behaviour, which Ms Melhuish said meant people were dealing with high prices by buying more efficient appliances, switching to gas, insulating - or switching off altogether.

"Those who can afford it are using less electricity because they have invested to counter those price rises.

"Those who can't afford to invest are getting cold."