Your Electricity Bill

Got a question about your power bill? Let’s see if we can help.

You may have received a letter from your power company explaining that, due to the increased charges by WEL Networks, the cost of electricity will increase after 1st April 2016.

To help you understand this, we wanted to provide some clarification to you.

Each year WEL reviews the costs involved with operating its network. This involves on going maintenance of existing assets and the reinforcement of the network to ensure it has the capacity to deliver a reliable and satisfactory service. WEL must recover these costs, along with the costs that are outside of WEL's control such as; transmission charges, inflation, rates and levies through the line charges. Effective 1 April 2016, WEL will pass on an average increase in their overall line charges of 2.8 percent to our customers. The majority of this increase can be attributed to a direct pass-through of Transpower price increases (2.0 percent) and the balance to the impact of general inflation on our operating costs (0.8 percent).

WEL Networks component of the bill you receive from your power company is around 40% of the total amount.

How are electricity charges made up?

There are a number of processes for providing power to your home – and ultimately you pay for these processes in your bill.

  • First, your power has to be generated. In New Zealand this is mostly from hydropower, geothermal power, and natural gas. There are 5 major generating companies in New Zealand: Contact Energy, Genesis Energy, Meridian Energy, Mighty River Power, and TrustPower.
  • The power then has to be transmitted. Transpower operates the National Grid which runs the power from the power stations to all parts of the country.
  • From there, your power is distributed. This is done by lines companies that own and operate the power lines in your local area. These companies connect power from the National Grid to your home.
  • Your electricity is also retailed. This is the power company you deal with and that sends you your bill. Retailers buy the power produced by generating companies in a complicated system of trading called the New Zealand Electricity Market. It is at this level of electricity trading that you’ll hear terms like “wholesale market” and “spot pricing”. The wholesale price at which retailers buy electricity can have a big effect on the price you pay (and it should be noted that all the main generators are retailers as well).

So, your bill covers the generation, transmission, distribution, and retailing of power as shown below. It also includes a small levy that runs the Electricity Authority, which governs and regulates the electricity industry.

What makes up the WEL Networks portion of the Electricity Bill?

 WELs charges make up around 40% of your total electricity bill; the diagram below demonstrates the complete supply chain and costs. It also shows the cost per kWh for New Zealand. (Source MED – Ministry of Economic Development Dec 2013)

WEL Networks collects approximately 29% of the total bill and another 11% on behalf of Transpower, totalling around 40%.

The electricity line charges are regulated by the Commerce Commission and cover the costs for providing electricity distribution services to customers. The line charges also include other costs allowed under Commerce Commission price-quality regulation, such as:

  • Transpower's transmission costs for the national grid,
  • Council rates, and
  • Levies from Electricity Authority, Commerce Commission and Electricity & Gas Complaints Commission.

The line charges are billed to you by your electricity retailer. If you would like to discuss how WEL Networks line charges are applied to your bill, please contact your electricity retailer.

What’s the difference between the fixed and variable portions of my WEL Networks charges?

 There are two types of charges:

  1. The FIXED or DAILY charge is a set amount per day regardless of whether or not any electricity is used, for Low users (Less than 8000kWh) this is regulated at a maximum of 15c per day.
  2. The VARIABLE OR sometimes called CONTINUOUS charge is directly related to the electricity you consume and forms the majority of your electricity charges.

 How can I save money on my power bill ?

Our line charges include a variable charge, as mentioned above, which means, the less electricity you use, the less you pay. For tips on how to use less electricity and save money on your power bill visit EnergyWise. www.energywise.govt.nz

How do I know if I am getting the best price from my current electricity provider?

The What's My Number website allows consumers to see how much they may be able to save on their electricity bills by switching retailers. A simple calculator, provided by Consumer Powerswitch, helps consumers assess their potential savings. Users can then click through to the Consumer Powerswitch website to allow them to see details of the different offers available and decide whether to switch.

 

We have pulled together a small GLOSSARY on some terms that may help you.

Controlled rates

You have a general electricity supply to your house but there are also separately wired appliances, normally the hot water cylinder, which the electricity retailer or lines company (depending on where you live) can switch off for short periods at time of peak electricity demand There are different ways that controlled rates can be metered, but you always get a small reduction in the amount you pay to compensate you for allowing the controlled appliances to be switched off (regardless of whether it is actually ever switched off or not).

Electricity Authority (EA)

Independent Crown entity established under the Electricity Industry Act 2010 to oversee the governance, operation and development of the New Zealand electricity market.

For more information, visit www.ea.govt.nz.

Low user tariffs

Pricing plans with low daily charges and higher variable charges for households that use little electricity. Government regulations require all retailers to offer these plans for households that are primary residences. If you use less than 8,000kWh per annum and the property is your primary place of residence then the low user option might be your best option. Please speak to your retailer to discuss what plan best suits you.

National grid

The transmission network, owned by state-owned enterprise Transpower, that transports high-voltage electricity from the major power stations to the local distribution networks operated by lines companies

Network Company/ Lines Company

Company that owns the local network of lines and distributes power from the national grid to consumers.

Network rebate or Discount

Some network companies are part owned by trusts whose members are all electricity consumers in the network. These trusts usually return a portion of the dividends it receives back to members as credits on their power bill.

Ripple control

Process by which the network company can remotely switch off wired-in appliances (usually hot water cylinders) for limited periods of time, to reduce electricity use during peak demand periods.

Time of use rates

These rates all allow, to some degree, for the amount you pay for your electricity to change depending on when you use it. There are a lot of different types of time of use rates, but generally they will either give you cheaper rates for your whole house between certain peak, off-peak and night times, or cheaper rates at night time for separately wired appliances, usually a hot water cylinder or night store heater.

What's My Number

A campaign developed by the Electricity Authority in association with Powerswitch. The campaign aims to provide consumers with information about the ability to switch electricity suppliers, the ease of switching and the potential savings consumers can make on their electricity bills by switching.

For more information, visit www.whatsmynumber.org.nz.

 

 

 

 

 

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