knowledge article

Household electricity bills will double over 5 years, forecasts departing lines association boss


Households will be paying twice as much as they do now on electricity within five years, the outgoing head of the Electricity Networks Association has forecast.

Graeme Peters, who will step down on Friday from his role at the association representing lines companies after an eight-year stint, separately warned that energy policy had become “lost” within the Ministry of Business, Innovation and Employment (MBIE).

The power industry was at the start of a period of “amazing growth” as new generation and transmission capacity came online to support the greater electrification of transport and other industries, he said.

“We're in a situation where we need to rapidly grow the networks to support decarbonisation.”

But Peters said an estimate by consultant BCG that $22 billion would need to be invested in the electricity distribution system alone in the remainder of this decade and about the same again in both the 2030s and the 2040s, was probably accurate.

“The challenge there is how are we going to pay for it?”

Lines companies had no way to recoup the investments they needed to make in beefed-up distribution networks other than by raising their charges, he said.

“Some of our members have done modelling that shows that for them individually, there's going to be a doubling or tripling in their peak load, and we have to build for the peak load because that's what heats things up and shorts things out.”

Given that, and the need for more generation, the amount of money that households would need to spend on electricity was going to go up considerably, he said.

“I would say that household expenditure on electricity would have to double in the next five years.”

Peters said that wasn’t all bad news.

“Offsetting that is that people will be spending a lot less on petrol and potentially gas.”

But the overall effect on people would be uneven, he said.

“What concerns me is that it is not going to be fair on those who can't afford an EV, who can't afford to buy modern appliances, can’t afford to put solar on the roof and can't afford a battery.”

Peters said he was frustrated that energy policy had been “lost” within MBIE, and the ENA had no contact with the ministry’s chief executive or its next tier of management.

“We are basically dealing with a business unit of a very large business unit.”

The result was that the policy changes needed to support greater electrification and assist the environment were “just not happening”, he said.

“It's just way too slow.”

An example was the time it had taken to advance regulations on measures to keep trees away from power lines, he said.

“There is a discussion at the moment around tree regulations, but we've been lobbying on that for about eight years.”

Lines companies would like to see smart EV chargers installed in people's homes so they could be remotely controlled in a similar way to flow control on hot-water heaters, he said.

“To us that is really low-hanging fruit, but it just gets lost inside all the other priorities that MBIE has.”

Peters said the Government, with the support of the Greens, had been “very strong” on climate change, for example in its “zero carbon” target for 2050 and its goal of getting rid of coal boilers by 2037.

“But I don't think they have backed it up with the stuff that has to happen underneath that with suitable passion and rigour.

“If we want to achieve those worthy targets, we need to revamp and review the way that we do energy policy. It's just insufficient at the moment.”

Peters backed Vector’s call for a new “ministry of energy”, which he suggested be called a ministry for renewable energy.

“But there doesn't seem to be any political will to elevate the status of energy policy,” he said.

Justine Cannon, general manager of MBIE’s energy and resource markets branch, said energy policy was “a priority focus area” for the ministry.

The ministry had an “ambitious and comprehensive programme of work underway to transition Aotearoa New Zealand to a more renewable energy system, while ensuring security of supply and affordability”, she said.

“This is the biggest energy work programme in many years, with significant resourcing dedicated to delivering this work.”

Its energy, resources and markets branch had an “open door policy with stakeholders” and was well-connected across industry, she said.

“The distribution sector and ENA are critical stakeholders for our energy policy work. MBIE has had strong engagement with these stakeholders to date, and intends to continue engaging closely with them as we progress our broader work programme.”

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