Heat on electricity spot price
Thousands of New Zealand households are experiencing sharp increases in power bills this summer due to low hydro lakes, a lack of wind, and the shutdown of a major power plant.
Wellington power retailer Flick Electric, which sells power at a price linked to wholesale prices, told customers in an email the cost of power had been ‘‘higher than normal’’ in recent weeks.
The news has left some customers frustrated following a dry winter that also sent prices soaring.
At the time, Flick Electric chief executive Steve O’Connor said higher prices lasted between three and eight weeks, and wholesale price surges happened only once every five years.
This time around, customers have seen increases since late November, with prices expected to settle just before Christmas on December 22 once a Taranaki power plant was back online.
The email also said annual maintenance on the Taranaki Combined Cycle, a gas plant run by Contact Energy, had taken a ‘‘big chunk’’ of gas generation out of the market.
‘‘Because of this temporary shortage, the value of power has increased … We know these current prices are a bit of a down buzz.’’
Some customers have expressed their frustration on Facebook, with one saying the price hike was ‘‘hurting’’.
Another said he had noticed ‘‘pretty high spot prices’’ over the past fortnight. ‘‘Paying more than 20 cents [per unit] in summer isn’t a goer really.’’
Another said off-peak pricing was 37 cents per unit higher than winter prices.
In response to some of the posts, Flick Electric commented: ‘‘Once the maintenance and conditions return to norm, spot prices should settle.’’
"Paying more than 20 cents [per unit] in summer isn't a goer really." Online commenter
O’Connor said customer usage was typically low at this time of year, so the bill impact was ‘‘very, very minor’’.
Customer had just been through two months of low spot pricing, and the surge would only be short-lived, he said.
In addition to the scheduled maintenance to the gas plant, there has been less wind generation during spring, O’Connor said. ‘‘They usually do [maintenance] at this time of year because spring is typically very windy in Wellington and it’s not at the moment.’’
The email read: ‘‘Wellington has been weirdly still and sunny, and there’s less snow than normal melting into the South Island hydro lakes.’’
So what does this mean for summer pricing? ‘‘Although the wind turbines are stiller and hydro lakes are lower than usual, there’s less demand for power over the warmer months, which will help keep a cap on your bills,’’ the email said.
Flick Electric founder Steve O’Connor says there will be a ‘‘very, very minor’’ change in customers’ bills.