Electricity prices spike in March quarter

Prices paid by electricity and gas supply producers rose 28.7 percent in the March 2021 quarter, while prices they received for production increased 17.4 percent, Stats NZ said today.

“Lower lake levels in the South Island have driven up wholesale prices for electricity generation, while an unexpected fall in production at the Pohokura gas field has seen gas supply prices also increase,” business prices delivery manager Bryan Downes said.

“The quarterly price change is the largest since 2018 but is nowhere near the magnitude seen in the 2008 power crisis.”

Electricity prices for residential customers, reported in Consumers price index: March 2021 quarter, increased 0.4 percent.

“Wholesale and household electricity price movements can differ due to transmission charges, industrial customers responding to peak-hour pricing, and hedging to manage price volatility,” Mr Downes said.

“In general, electricity retailers do not pass on wholesale pricing to households unless they are on a spot price contract.”

Electricity is a production input for industries – from farms to factories. The farm expenses price index measures price changes for inputs across various farm types. Electricity prices paid by farms increased 5.8 percent across the March 2021 quarter – lower than fuel prices which increased 12.9 percent.