Gentailers have raised prices 8% for two years running while banking sky-high profits. Now the Electricity Authority is formally asking why, writes Catherine McGregor in today’s excerpt from The Bulletin.
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The regulator steps in
The Electricity Authority has formally asked all power companies with more than 1% market share to explain their latest price increases. As The Post’s Tom Pullar-Strecker reports, the EA estimates that households face an average 8% rise going into winter – on top of last year’s 8% – with Stats NZ reporting that electricity prices were up 12.5% over the year to March 2026. EA general manager Andrew Millar acknowledged that lines charges account for “around one-half to two-thirds” of the increases, but made clear that did not fully explain them. “We want to know what else may be pushing prices up,” he said. What the EA can actually do about whatever it finds is less clear.
It’s all about generation
The reasons for the EA’s disquiet are obvious. In February Meridian, Contact, Mercury and Genesis announced a 42% increase in their combined operating profits for the six months to December, totalling $1.85 billion. Broker Forsyth Barr forecasts Meridian is on track for an 89% net profit increase for the full year, boosted by a near-record March quarter and “a high level of financial sales at a below average cost to supply”.
In a separate analysis for The Post, Pullar-Strecker identifies the source of the massive profits. Of Meridian’s $708 million energy margin for the half year, only $37m came from its retail arm. The other $671m came from wholesale – the generation side. Splitting up the gentailers, as NZ First has pledged to do, might help around the edges. “But it would not directly impact the ability of the generation arms of big four power firms to earn excessive profits by charging the fossil-fuel price for electricity they are able to generate for next-to-nothing from free water and the hydro dams they inherited from the Crown.”
The economic costs
Government-commissioned modelling by Sense Partners, reported by the NZ Herald’s Kate MacNamara in December, found high electricity prices had cost New Zealand more than $5.2 billion in foregone GDP over the near-decade to 2025, leaving wages 1.4% lower and employment 0.5% lower than they otherwise would have been. “The estimated GDP loss is driven largely by lost household spending, 1.65% lower in 2025 than it would otherwise have been.”
The household impact of high prices is highlighted by Consumer NZ’s research showing that last winter, one in five New Zealanders cut back on food or other essentials to pay their power bill, and one in five went to bed early to keep warm. Consumer’s Paul Fuge noted that high hydro inflows have driven down wholesale prices, and those savings should have flowed through to customers. “Those lower generation costs should be easing the pressure on consumers by offsetting these rising lines charges. That doesn’t seem to be happening. And that’s deeply unfair.”
The electric election
The fuel crisis has given new force to the arguments of electricity advocates. With petrol prices at record highs and the LNG terminal – the government’s centrepiece response to dry-year risk – now in jeopardy after the closure of the Strait of Hormuz sent LNG prices soaring, the case for rooftop solar has sharpened considerably. For proponents, the combination of an EV and solar power offers a way to decouple from both a captive electricity market and a fossil fuel economy that are simultaneously failing consumers.
Writing in Newsroom, Rewiring Aotearoa’s Mike Casey argues that the gentailers, for all their public commitments to customers, “still fight behind the scenes to maintain their advantage and keep bills high.” He is equally pointed about the government: it “should be looking out for the customer” but is also “the largest shareholder of the existing system”, creating an ongoing structural conflict. The government needs to wrestle away some of the industry’s power and “help New Zealanders take control of their own energy destiny” by throwing its support behind solar, he says.
“Anyone who keeps the price of electricity high for New Zealanders is going against our national interests”, he writes. “So fasten your seatbelt. This electric election is going to be a wild ride.”
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