How Much Are You Paying For Power? Average Electricity Costs per kWh in NZ

We all rely on electricity in our day-to-day lives. But whether it’s to watch TV, run the heat pump, or put on a load of washing – you’re adding to your power bill.

The overall cost of your electricity is broken down into two main parts. You pay for the actual electricity you use, plus a fee for the upkeep of the power grid that delivers that juice into your home.

Nationally, for the average power consumer (four-person family), using 22kWh per day on the cheapest low-user tariff available without a fixed-term contract, this works out at around 31c per kWh.

However, depending on where you live in the country, this can vary between as low as just over 27c to nearly 43c per kWh.

Of course, you can’t do much about where you live, apart from move. So keeping on top of your usage charges is essential if you want to reduce your power bill. That’s why it’s important to do your research to find a good deal on the power you use.

But what exactly does a good rate look like in your area? In this article, we break down the average electricity costs by kWh and line fees region to region, and provides tips on how to find a great deal.

How Much Are You Paying For Power? Average Electricity Costs per kWh in NZ. In this article we cover:

• Power prices per kWh
• Lines vs energy component
• Total costs
• Low users vs standard users
• How often do electricity rates change?
• Understanding what you pay
• Finding the best kWh price for power?

Power prices per kWh

The per kWh price refers to the price you are paying for the power you use. The table below shows the average regional rates for electricity across New Zealand.

Data: www.mbie.govt.nz Quarterly Survey of Domestic Electricity Prices, November 2021.

As you can see, the rate you pay for electricity varies considerably depending on your region. While you might not think a few cents makes much difference, the costs add up over a year – especially for households using plenty of electricity.

→ Related article: Simple Guide to Finding the Cheapest Power Deals

Lines vs energy component

While there’s not much variance in the cost of the electricity we consume, from 18.3c to 23.9c around the country, there’s a far greater disparity in the prices we pay for the line component of our power bills.

In Kerikeri, for example, 21.7c goes towards line component costs, whereas consumers in Ashburton pay only 6.9c. That’s quite a difference.

Line charges are the cost of the infrastructure required to get electricity from the power station to your home. You can see the average costs below:

Data: www.mbie.govt.nz Quarterly Survey of Domestic Electricity Prices, November 2021.

Why is there such a big difference in line component costs?

The cost of delivering power to your home will differ depending on where you live:

• Population density – costs are split across consumers. The more consumers to bear the line costs the lower they will be.
• Distance from power station – how far the power needs to go (from the nearest power station) dictates the level of infrastructure needed, and the cost of maintaining that infrastructure.
• Terrain – Do the power lines need to traverse mountains or forest, or through flat urban areas?
• Commercial/industrial users – commercial and industrial businesses consume a lot of energy and are typically supported with significant infrastructure. A large presence/absence of them in your region can impact lines costs.
• Competition – There are over 30 lines companies in New Zealand who are in charge of the infrastructure needed to deliver power to your home. But some regions are only serviced by one. These companies face no competition or incentive to keep prices down in these areas.

Total costs

When you add the two sets of prices listed above together, the line charges and energy costs, you get an overall picture of the cost of electricity around the country. And, as you can see, there’s a big difference between living in Dunedin (27.66c per kWh) and Kerikeri (42.97c per kWh)

Data: www.mbie.govt.nz Quarterly Survey of Domestic Electricity Prices, November 2021.

Low users vs standard users

It’s worth understanding the difference between the two. For if you are a low user, you could save considerably on your power bill.

To be classified as a standard user, you must use more than 8000 kWh per year at your home if you live in the North Island, or more than 9000 kWh if you live down the bottom of the South Island, where winters are colder.

• Standard user plans: higher daily charge and a lower variable electricity usage charge
• Low user plans: lower daily charge and a higher variable electricity usage charge

Standard users pay daily fixed charges anywhere from $1.50 to $2.50 per day; low users are usually only charged 60c per day.

Low-user plans are ideal for people who use gas for their hot water, cooking and heating their homes, and are not running a Bitcoin mining factory out of their garage! But it’s worth checking even if you think you consume a heap of power. As these rates were set way back in 2004 and average usage has fallen since then. Thanks to our smarter, energy-efficient appliances, it’s estimated about 68% of Kiwi homes now constitute low user households.

Because of the reduction in energy use in most Kiwi homes, the low-user energy tariff is currently being phased out. And, over the next four years, the daily low-user tariff is set to increase until it is on a par with standard users. For more on the subject, read our story: Power Price Hikes: End of the Low-User Electricity Tariff.

How often do electricity rates change?

It’s most common for electricity rates to change just once every 12 months. Some retailers do this on a by-customer basis, changing individual rates on the anniversary of sign-up. Other retailers apply a customer-wide rate change on a set date.

In most situations, your energy company needs to give you advanced notice that they’re changing your rates, allowing you to switch retailers if you’re unhappy with the price change.

Some retailers offer what is called a fixed rate plan. These deals essentially stop your rates from changing for a period of time – usually two years.

While the initial variable rate may be slightly higher than standard deals, you can potentially save in the long term by sheltering yourself from electricity price increases. Only the variable rate charge is frozen, however, so any change to the daily fixed charge or Electricity Authority levy (see below) will be passed on to the customer.

→ Related article: Fixed-Rate Power Plans: the Pros and Cons

Understanding what you pay

Discovering exactly how much you’re paying for your electricity, shouldn’t be tricky. Your daily fixed charge rate and your total variable usage charge should be clearly shown on your bill. Along with a small Electricity Authority levy, which goes towards running the government agency.

But it certainly pays to do your research, compare energy companies and shop around.

To find the rates of an electricity retailer, visit their website and look for a pricing section. Most retailers require you to insert an address, though some just need to know your general area to give you an idea of your rates.

Be conscious of a few traps, so ask yourself some of the following questions when comparing rates:

• Do these prices include GST?
• How frequently do rates change?
• What type of tariff is this?
• Does this retailer offer discounts?
• Are there additional fees?
• Does this contract lock me in?
• Are there any additional perks?

Finding the best kWh price for power?

The fact that you’re reading this means that you’re already on the right track to finding a great deal on power. But when comparing power companies, it’s important to consider the broader picture – don’t become too focused on finding a deal with a big prompt payment discount or special perk. Be sure to balance all the rates, discounts, fees and contract periods when making a decision, as well as more personal factors, such as customer service and support.

To help you find the best value electricity retailer, Canstar Blue rates NZ power companies for customer satisfaction and value for money, see the table below for some of the results, or you can click on the button below for the full results of our survey.

Canstar Blue’s latest review of NZ power companies compares them on customer satisfaction. The table below is an abridged version of our full results, available here.

Compare electricity providers for free with Canstar Blue!

About the author of this page

This report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.