By Rebecca Styles
Research Lead | Hautū Rangahau
Think electricity prices are as simple as supply and demand? Discover the truth behind common myths and what really drives your power bill.
On this page
- Myth 1: All power companies charge the same price
- Myth 2: It’s all down to higher lines charges
- Myth 3: NZ power is cheap compared to other countries
- Myth 4: Power companies can’t afford to build more generators
- Myth 5: The oil and gas ban has caused today’s high prices
- Myth 6: Renewable generation is more expensive than fossil fuels
Myth 1: All power companies charge the same price
Not all power prices are the same. On average, households that used Powerswitch to change their provider saved $450 a year.
Yet in Consumer NZ’s latest power company survey, about 38% of respondents thought all providers charged the same price. This could be why 56% of respondents had stuck with the same power provider for more than 10 years.
Myth 2: It’s all down to higher lines charges
It’s true that lines charges have contributed to recent prices increases, but they’re not the whole picture.
According to the Electricity Authority (EA), power bills have increased by an average of 8% this year. If you pay $200 a month for power, this means an extra $16. Lines charges account for about one-half to two-thirds of that.
The EA has asked power companies to explain the rest of the increase. It’s expecting to release the results by the end of this month.
Why did lines charges go up? The Commerce Commission sets the price of these charges – which make up just over 30% of your power bill and cover the cost of getting power from remote power stations to homes and businesses – every 5 years.
The most recent price change took effect in April 2026. The Commission said it reflected high inflation, interest rate increases and higher levels of investment.
Myth 3: NZ power is cheap compared to other countries
New Zealand used to have cheap power by international standards, but the latest OECD report says that’s no longer the case.
We came in fourth highest out of 25 countries in the OECD comparison of average wholesale power prices between 2018 and 2025, exceeded only by Greece, Italy and Ireland.
New Zealand’s wholesale power prices “are now uncomfortably high in international comparison”, the report states, “far higher than in the Nordic countries with similarly renewables dominated systems”.
While most consumers are protected from high wholesale spot prices, if spot prices stay higher over a longer period, retailers and generators selling hedges will choose a higher fixed price to balance their risk. This can lead to higher retail prices for consumers.
Which power company has the happiest customers?
See the full ratings of all power companies in our nationally representative survey.
Myth 4: Power companies can’t afford to build more generators
Our energy market is dominated by four big gentailers – companies that both generate and sell power. Their most recent half-year profits ranged from $20 million (Mercury) to $227 million (Meridian).
Rather than investing profits in new wind farms or hydro dams in the past ten years, the gentailers have paid most of them out to shareholders. Between 2015 and 2025, Meridian, Contact, Genesis and Mercury paid out a total of $11.8 billion – between 90% and 240% of net income.
Why? We think there’s little financial incentive for gentailers to invest in new generation, because of the way our wholesale market works.
Whenever low-cost renewable generation isn’t enough to meet demand for electricity, New Zealand relies on non-renewable sources (fossil fuels) – which are more expensive – to make up the difference.
And when this happens, every generator that supplied electricity during that half-hour period gets paid the price of the most expensive electricity supplied in their location. In other words, when New Zealand runs out of renewable electricity, the generators can make more money.
The good news is that after little investment in generation for more than 10 years, there is now a pipeline of new projects. We hope this will have an impact on power prices for consumers.
Myth 5: The oil and gas ban has caused today’s high prices
In 2018, the Labour government banned any new permits for offshore oil and gas exploration. The National-led coalition government reversed this ban in 2025.
Even though new permits were banned during that seven-year period, existing permit-holders kept trying to find new gas. In fact, Aotearoa has spent more than a billion dollars since 2012 trying to find new gas fields – with very little success.
During 2025 natural gas reserves fell 23% to the lowest level since records began 20 years ago, according to the Ministry of Business, Innovation and Employment.
As a result, gas has become more expensive. Since gas-fired power stations sometimes set prices in our electricity market (see above), higher gas prices can push up wholesale electricity prices – and might ultimately feed through to household power bills.
Even if new gas were discovered tomorrow, it could take a decade or more to come online. In reality, the ban did not cause today’s high prices – we were already running out of gas.
Myth 6: Renewable generation is more expensive than fossil fuels
No. Building and fuelling a coal-fired plant is the most expensive form of generating electricity, followed by gas.
Once renewable power sources like hydro, wind and solar are built, they’re very cheap to run, because they don’t require fuel (water, wind and the sun are free). The building costs for solar and wind generation have also reduced in the past 10 years, according to the New Zealand Infrastructure Commission.
Late last year, we saw evidence of how renewable generation can influence the market. Between August and October 2025, wholesale electricity prices dropped massively, from an average of $280/MWh to an average of $30/MWh.
The Electricity Authority said this drop was caused by “consistently windy conditions and increased hydro generation” – meaning we didn’t need to rely on more expensive non-renewable sources – combined with lower demand as warmer spring weather kicked in.
If cheaper renewable energy continues to replace fossil fuels, we think it will put pressure on prices and should result in lower power bills for your household.
End high power prices now
Tell the government power bills must come down. Back our four-point plan and help us fight for cheaper power.
