Electricity Cheapest in a Decade

New Zealand power increasingly affordable, cheapest in a decade reveals MBIE data.

This doesn’t mean the bottom line on power bills is getting smaller, the opposite is true. But the chart takes a turn after adjusting for inflation, the fact that a dollar is less valuable than it was 7 years ago.

The cost per unit (kWh) measured in 2022 dollars was just under 35 cents in 2015, and has declined to 31.5 cents in 2023.

Average yearly household use has also declined, with the rollout of heat pumps, LED lighting, better appliances, and the nation’s housing stock slowly being insulated or replaced. Combined with unit prices dropping, this has seen meaningful reductions in bills. Measured in 2022 dollars, the average household in 2015 spent $2,544 a year, and in 2023 they spent $2,213.

Affordability

What about affordability? If we compare the average households electricity expenditure to the average households income it looks even better. Households spent 2.5% of their income on electricity in 2012, and today only spend 1.7%.

Further back

Looking at figures just from 2006 is not the whole picture. Residential electricity prices are certainly higher now than in the 80s and 90s. The backdrop to this was far more opaque and distorted final prices. A combination of financing and construction of excess (for the time) hydro dams by the government, more lax environmental laws, a cross subsidy from commercial to residential users, and artificially cheap natural gas among other things. These costs were realised by someone, but not reflected in the price.