Levy
What does the Electricity Industry Levy cover?
The Electricity Industry (Levy of Industry Participants) Regulations 2010 (Regulations) provide for the recovery of the annual operating costs of the Electricity Authority (Authority), and specified activities of the Energy Efficiency and Conservation Authority (EECA) and the Ministry of Consumer Affairs.
How is the levy collected?
The levy is paid in monthly instalments by companies generating, purchasing (retailing) or distributing electricity, based on a methodology set out in the Regulations, which takes account of the types of activities and quantities of electricity they generate, purchase or distribute.
These levies are passed onto consumers by their power companies (retailers).
How is the levy set?
The Authority and EECA are required to consult industry participants (generators, distributors, retailers and other purchasers) regarding their proposed budget requirements for the coming year. The levy rates used to charge industry participants are then set to reflect the budget, and are published in the Gazette and on the Authority's website.
Why does the levy rate charged to customers vary between power companies?
The levy rate passed onto consumers is set by each retailer. The Authority charges retailers the levy according to a matrix of different rates so there is no single rate they can pass directly on to their customers (see Explanation of the levy for more detail on the way retailers and other industry participants are charged the levy by the Authority).
There are a number of reasons why the levy rate may vary between retailers:
- Retailers determine when and how often they change their levy rates. The Authority sets levy rates on 1 July each year but retailers can choose the frequency and timing of changes to the levy rate they pass on to their customers. This means that one retailer may have recently increased their levy rate while another might be about to.
- The levy rates set by the Authority on 1 July which are used for monthly invoicing of industry participants are only estimates. The final rates are determined once the Authority's financial statements have been audited and actual quantities of electricity generation, distribution and retail sales for the year are known. For this reason a reconciliation is performed after the end of the financial year to determine the actual levy rates for the previous year. Retailers are then either charged or refunded the difference and this “washup” amount should be factored into their levy rates for the following year.
- The levy rate shown separately on your power bill may include other costs in some cases. The Electricity Authority levy will be clearly named if it is separately shown. If it is called something more general such as an 'electricity market levy' then it is likely to incorporate costs other than the Electricity Authority levy and you should ask your retailer to explain what these are.
Is it possible to standardise the levy rate?
The Authority does not have the authority to tell industry participants how to price their power. The levy is simply one of their input costs and it is up to individual retailers to incorporate this into their pricing in a simple and meaningful way. There is no reason why, for example, retailers can't incorporate the levy into their existing kWh rates.
Who should you contact about the levy?
If you have any questions concerning the levy, in the first instance, you should contact your retailer.
This page is related to: Electricity Levy.