Dmitry Gafiyatulin, Director of Reliance Utilities, gives an update about the current situation of the energy market in New Zealand and explains the reasoning behind the increase in electricity and gas prices. He recommends that NOW is the best time to review, renegotiate and refix the pricing of your current gas and electricity contracts. He forewarns that it is unlikely you will get the same pricing as the past year or two, but it is the best safeguard against future price increases.
The reason for increased electricity pricing comes down to a limited supply. There has been less hydro energy production due to the low water levels in the lakes of the South Island.
The increase in gas prices is due to the fact that the government is still not releasing any gas exploration permits, which means the gas retailers cannot explore any new gas fields, limiting the production of gas. This has resulted in 5 retailers withdrawing from the energy comparison website Powerswitch, who are responsible for 70% of the switches. This effectively means there is less competition, and gas prices are likely to increase.
Many retailers are not accepting new clients for gas, and one retailer is actively encouraging their clients to leave and find a different gas retailer. The gas retailers who are accepting new clients are offering double or triple the average pricing rates! For example, in Auckland, the average price per kilowatt-hour has been 5-6 Cents, now prices are being seen to increase to 14-15 Cents per kilowatt-hour. This means that if you are a large gas user in your business, your gas bill will become double or triple the current amount.