New power bill graphic helps consumers see where their money goes

What costs are included in the average power bill?

New Zealand generates much of its electricity at big hydro power stations in the South Island. That power needs to be moved or ‘transmitted’ around our long, skinny country to where it’s needed. This is where the national grid comes in, a portion of your bill pays for that. Power then needs to be transported to your house along power lines, and these need to be built and looked after so your bill includes distribution costs.

Your power company purchases and manages all this for you, so their operating costs also contribute to your bill. The rest of what you pay for is meter reading and upkeep, GST and the government levies for operating and regulating the electricity market where electricity is bought and sold.

Over the last decade, the proportion of generation costs has increased from 32% to 38.5%

The proportion of generation costs in the average power bill has increased, reflecting higher wholesale electricity prices. Increased demand for electricity during peak periods, relatively dry weather conditions and gas supply uncertainty have contributed to price rises, compounded by delays in generation investment, including due to the COVID-19 pandemic, and uncertainty surrounding Tiwai Point’s future.

The proportion of distribution and transmission costs has decreased from 27% to 24.5%

Distribution and transmission costs have decreased as a proportion of the bill, due to the timing of when the Commerce Commission set regulated distributors’ revenues. This is because the last Commerce Commission reset in 2020 occurred during a period of low interest rates, resulting in reduced pressure on these costs relative to the other services included in a power bill.

The grid owner and distributors’ revenues have recently been reset at a time with higher interest rates and these costs are beginning to be passed through now to consumers. We may see an increase in the proportion of distribution costs when analysing the average power bill in future years.

The proportion of retail costs has decreased

The proportion of retail costs in the average household power bill has reduced slightly – although retail costs were not separately listed in our legacy bill breakdown data. The exact cause of this small reduction is unknown but may be due to differences in the methodology we used to calculate retail costs compared to our previous estimates.

The proportion of metering costs has increased from 3.5% to 4.5%

The proportion of metering costs has increased slightly. This may be due to the significant uptake of smart metering technology over the past decade, and differences in the methodology used to calculate metering costs compared to earlier estimates.

Find out more: Your power bill