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Retail and residential supply

Annual residential electricity cost and consumption in New Zealand for the period 2006 - 2021

The total residential electricity consumption in 2020 was around 12.9 TWh.

Average annual household consumption shows a generally downward trend over the period from 2006 to 2021. Average annual household expenditure on electricity has been relatively stable in real terms, increasing by approximately 11% over the same period. In 2021, the average annual residential consumption was 7,223 kWh per household, varying from 5,938 kWh per household on the West Coast to 8,467 kWh per household in Southland. The average annual household expenditure in 2021 was $2,121.

Residential electricity cost breakdown 2021

Generation represents approximately one third of the cost of retail electricity, with the combined cost of transmission and distribution making up just under another third. The balance includes the retailing margin, levies and GST.

Electricity consumers connected to the grid have a choice of retail supplier. As at 31 May 2021, there were 37 electricity retailers registered with the Electricity Authority, although only 15 retailers had more than 1,000 customers. The top five retailers by number of individual consumer connections were: Genesis, Contact Energy, Meridian Energy, Mercury Energy and Trustpower. These top five retailers are also generation companies. The Electricity Authority funds a price-comparison service managed by Consumer New Zealand, to assist consumers to compare pricing offered by different retailers, and evaluate the benefits of switching suppliers. The rate of customers switching suppliers has increased significantly over the past two decades, from 11,266 per month in January 2004 to 38,273 per month in May 2021.

Most retail customers have term contracts with their electricity retailer, but some are on pre-pay arrangements. Customers may choose pre-pay to help them manage expenditure, but others may be forced onto pre-pay because they have been deemed to be a credit risk or have a history of disconnection because of unpaid bills. The costs of electricity on pre-pay are typically more than on term contract. The higher costs of pre-pay electricity can be a significant concern because research in New Zealand and in other countries indicates that households on pre-pay are more likely to be unable to afford to adequately heat their homes.

Smart meters

Smart meters have been widely deployed in New Zealand to replace older generation domestic electricity meters. By 2016, over 1.5 million smart meters had been installed, representing 70% of homes. At the early stages of the installation of smart meters in 2009, the Parliamentary Commissioner for the Environment (PCE) criticised the roll-out on the grounds that the capabilities of the metering systems being deployed were too limited, and would not sufficiently enable future benefits for the consumers and the environment. In an update report in 2013, the PCE stated:

The New Zealand roll-out of electronic meters is unusual internationally, in that it has largely been left to the market. In other countries, regulatory bodies have been much more involved in specifying what these meters could do. In New Zealand, the retailers were left to decide on the features the meters contained. The opportunity for these meters to provide a wider range of benefits at little extra cost has been lost.

Most smart meters have been installed by electricity retailers. Retail services that have become available following the deployment of smart meters include pricing based on time of day. Some retailers offer a tariff that follows the spot price in the wholesale electricity market, and other offerings include a free ‘hour of power’ and a web-based prepay service.