Why power bills rose nearly 7% in first half of this year

Power bills across all New Zealand households and small businesses increased on average by 6.8% in the first half of 2026, driven mostly by higher lines charges, the Electricity Authority says.

This follows an increase of 8% in 2025.

The Electricity Authority (EA) said the rises, according to new information provided by electricity retailers, did not affect all consumers.

About 22% of households and 34% of small businesses experienced no change between November 1, 2025, and June 30, 2026, the market regulator said.

For those that did face a price change, household bills increased by an average of 8.7%, while small business bills rose by 7.2%.

Higher lines charges were the biggest driver of price increases, making up 54% of this year’s increase (55.9% for generator-retailers; 47.8% for independent retailers, on average).

These lines charges cover the distribution and transmission costs – the cost of building, operating and maintaining electricity infrastructure.

The cost of electricity – energy costs – made up the next largest component.

For independent retailers, data showed higher energy costs accounted for 44.6% of the increase on average, and the remaining 7.4% was for margins and 0.2% from levies.

For generator-retailers, or “gentailers”, energy costs were reported as 16.7% of the increases on average, while higher margins accounted for 16.2%.

The EA’s release follows moves by Energy Minister Simeon Brown to ensure the big falls in ASX futures prices seen so far this year are quickly passed on to consumers.

Brown has written to the chief executives of Meridian, Mercury, Genesis and Contact about the falls and his expectation that they be reflected in power bills “without unnecessary delay”.

The EA, in its release today, said it recognised that what constitutes gentailers’ energy costs and subsequently their margins (what remains after lines, energy and other costs are removed) are not well defined.

This was because gentailers generate a significant proportion of their own electricity and it is difficult to isolate their underlying energy costs from margins, it said.

Therefore, caution was needed when interpreting the figures for increases to gentailers’ energy costs and margins.

“These are an indication, but not a full picture, of what is going on in the electricity market,” the EA said.

EA’s “level playing field” rules for future hedging contracts came into force in July.

The new measures require gentailers to offer hedge contracts to independent retailers on the same terms as they offer to their own retail businesses.

They also allow the EA to watch retail prices closely and monitor progress.

This new regime is designed to improve competition and give retailers confidence they are not being discriminated against when purchasing wholesale electricity.

The EA said it was also closely watching gentailers’ results for the end of the 2026 financial year.

In the half-year results, gentailers reported a combined investment of $1.2 billion in new and upgraded generation.

The EA also noted the increase in lines charges was expected after regulatory decisions by the Commerce Commission in 2024.

It approved increased revenue limits for national grid owner Transpower and lines companies to help recover the costs of upgrading and maintaining the network to meet growing demand and future consumer needs.

To help reduce the initial price rise and impact on consumers, the increases have been spread over five years, rather than being applied all at once in 2025.

Lines charges are expected to continue rising, although at a slower pace, through to 2030, the EA said.

The EA also said prices for electricity contracts for future years have been falling since January this year.

“While lower wholesale prices would generally be expected to reduce the energy component of power bills, changes in wholesale prices can take time to flow through to consumers.

“Retailers may manage these costs over longer periods, meaning retail prices may not immediately reflect movements in the wholesale market.”

This smoothing effect prevented consumers from experiencing frequent “price shocks” as wholesale prices rise and fall.

“The data shows this lag is still occurring, with many consumers seeing electricity prices increase earlier this year despite a sustained fall in wholesale prices starting at this time.”

The EA said it expected the lower generation costs to benefit consumers shortly as they would help to offset the higher lines charges that are likely next year under Commerce Commission price paths.

Last week, the Auckland Business Chamber and the Northern Infrastructure Forum called for big changes to be made in the energy market.

Chamber chief executive Simon Bridges made a case for separation of the generation and retail functions of the big four, which control 85% of New Zealand’s power generation, to intensify competition in the retail market.

Stats NZ data showed the consumers price index rose 4.1% in the June year, driven mostly by fuel prices but also by a 12% increase in electricity costs.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.