Wholesale electricity prices at a three year low

January 7th, 2014 at 11:00 am by David Farrar

The Dom Post reports:

Electricity prices are at a three-year low, at the very time people are using less power.

But, despite the low prices – which have reached 48 times lower than the peak last year – residential customers will notice little change as contracts buffer them from the highs and lows of the volatile wholesale market.

NZX Energy figures show wholesale electricity prices on Boxing Day dropped to $7.70 per megawatt-hour – one million watts of energy used continuously in a single hour.

The last time it was that low was on January 30, 2011.

This is of course conclusive proof that we need to destroy the wholesale market in electricity and have the Government become the sole monopoly purchaser and wholesaler seller of electricity.

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20 Responses to “Wholesale electricity prices at a three year low”

  1. Inky_the_Red (751 comments) says:

    Yes but will the lower prices reach the consumer?

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  2. ross69 (3,652 comments) says:

    So, since Labour announced it’s policy, wholesale prices have fallen. Goodness, they’re not even in government and their policy is working!

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  3. Pete George (23,437 comments) says:

    Electricity prices are at a three-year low, at the very time people are using less power.

    An odd way of putting it, it shouldn’t be a surprise that at a time of lowest demand prices drop. Add to that the wetter and windier weather we’ve been having (wind power normally produces 10% of our electricity but it’s been up to 12%) and you’d expect prices to be low.

    But, despite the low prices – which have reached 48 times lower than the peak last year – residential customers will notice little change

    The same as residential customers noticing little change when wholesale prices go very high.

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  4. anonymouse (709 comments) says:

    Electricity prices are at a three-year low, at the very time people are using less power.

    Did the reporter stop to think that these two events might be related…..

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  5. CHFR (226 comments) says:

    No and neither did our 2 first comentators.

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  6. flipper (3,952 comments) says:

    But that CANNOT be correct.
    Wussell red melon and prissy Parker have not said it is so. :-)

    Oh dear, what a pity. More good economic news to go with the Rock Star view of the HKSBC

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  7. tvb (4,330 comments) says:

    I assume the wet summer means lakes are full coupled with low demand means low prices. The market works.

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  8. srylands (405 comments) says:

    “Did the reporter stop to think that these two events might be related…..”

    It is a stupid article. Wholesale prices are low right now for obvious reasons – low demand and lots of hydro storage. How surprising. The journalist seems to be looking for some profound conclusion when there is none.

    An investigative journalist could run a story about the market over the last decade and the policies that would best serve NZ, critically analysing the NZ Power policy. But we don’t seem to have any of those. So we get this instead.

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  9. wreck1080 (3,863 comments) says:

    My power prices have probably doubled under the so called ‘competitive’ model, while my telecoms bill has probably halved.

    The current electricity market is a fraud on consumers, who have been duped by highly paid lawyers.

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  10. Nuwanda (83 comments) says:

    It’s the fixed costs on your bill that are the killer. My last bill was $150 and of that $54 was fixed network charges from both the local lines company (a trust) and Meridian. So more than 1/3 of the bill is fixed.

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  11. Bruce Forbes (5 comments) says:

    If Labour and the Greens come to power in the next election, they will (or at least have promised to) substantially increase the price of CO2 emissions under the ETS. This will increase the price of all forms of energy, including electricity. The policy of Labour and the Greens is in response to the perceived threat of catastrophic man-made global warming, which most informed people now know to be a crock – the world has not warmed for at least the last 15 years, despite record human CO2 emissions. Their policy is therefore out of step with both science (that is real science – not man made global warming pseudo-science) and informed public opinion.

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  12. OneTrack (2,987 comments) says:

    wreck – “The current electricity market is a fraud on consumers,”

    How many power companies have you tried!

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  13. F E Smith (3,304 comments) says:

    The current electricity market is a fraud on consumers, who have been duped by highly paid lawyers.

    Help me out here, wreck; where do the lawyers come into it?

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  14. cha (3,935 comments) says:

    Not particularly unique though.

    http://www.dallasnews.com/business/energy/20131230-powering-down-home-electricity-use-in-u.s.-falls-to-2001-levels.ece

    http://www.designrecycleinc.com/led%20comp%20chart.html

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  15. wikiriwhis business (3,883 comments) says:

    ‘This is of course conclusive proof that we need to destroy the wholesale market in electricity and have the Government become the sole monopoly purchaser and wholesaler seller of electricity.’

    so we would go right back to where we were before.

    Might as well bring back Ministry of Transport while we at it. Who weren’t solely revenuing.

    Based on low road toll as well.

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  16. Akld Commercial Lawyer (165 comments) says:

    (Slightly) tongue in cheek as someone’s cocktail-making experiments have consumed all the gin.

    Helpfully or unhelpfully, the MBIE have a timeline that is also reproduced, I recall, in wiki. Since the days of Douglas and Prebble, the energy sector, particularly electricity have been the subject of constant tinkering (lawyering) – the Bradford reforms being particularly memorable. Advisers are most active during periods of change. Business, of course, needs certainty but is itself always on the lookout for new opportunities. There is a multiplier effect where we encounter both regulatory reform and market changes. The recession brought a period of both and now there are changing patterns in demand to manage.

    The amounts at stake, in terms of capital invested and the ongoing need for investment (such as that required to pay catch-up for the decades of underinvestment in the Transpower network) and its impact on industry – are very large both in absolute and relative terms for this funny little economy. So no surprises that the regulatory thicket generates the need for legal and other advisory input.

    The main concern for consumers should be that a period of relative stability will be ended with tinkering for purely political ends. Of one thing you can be sure is that advisers will be busy – but the uncertainty will be extent to which meddling frightens off much-needed investment. From where I sit, the only fraud is that peddled by those who wish to pretend that economic orthodoxy will determine what is delivered to the consumer and how much they pay for it.

    Now off to see about Mr Gordon…

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  17. Chicken Little (741 comments) says:

    Add to that the wetter and windier weather we’ve been having (wind power normally produces 10% of our electricity but it’s been up to 12%) and you’d expect prices to be low.

    ….and I call bullshit on that stat of yours pete, 10% – 12%. Care to back it up please??

    Also the windier wetter line – proof please -nothing from Salinger though thanks :)

    Thanks

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  18. burt (8,206 comments) says:

    Wholesale prices at a three year low …. Perfect opportunity for a state run monopoly to make an awesome profit ….

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  19. muggins (3,343 comments) says:

    Wholesale prices might be down but retail prices keep going up.
    I got a break last year. One power company was using a call centre in a effort to get clients to change over. Their gas prices were quite a bit cheaper than the company that supplies me though their electricity prices were much the same.
    I phoned my company and told them I was thinking of changing over so they offered me a $150 credit if I would stay with them for a few months. That more or less offset the lower gas prices the other company was offering so I took the $150.
    I intend to check with that other company just before winter sets in and I start using more gas. If their gas prices are still quite a bit cheaper I will be asking for another $150 credit from the company that supplies me.

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  20. burt (8,206 comments) says:

    wikiriwhis business

    so we would go right back to where we were before.

    Might as well bring back Ministry of Transport while we at it. Who weren’t solely revenuing.

    Based on low road toll as well.

    That pretty much nails it really. The flip flop of change… People did call the MOT the revenue collectors because they were often officious little men who liked wearing a black uniform.

    The thing that scares me is…. Labour could say something like …. ‘With KiwiPower we won’t be like National and take excess profits from state owned generation. We’ll wind the clock back on profits to how they were in the last Labour government’ and the people would cheer.

    Sadly though, that’s how much like a goldfish you need to be to support socialism and union owned fiscal policy. It’s never worked, it will never work, but it’s a lovely dream so it gets tried again and again by folk with a short memory. The Labour Party survives because it has National to blame for the economic pain while it’s last 1-2 ( rarely 3 ) terms of folly come home to roost. National straightens some shit out, resets a path and gets it going again then people get complacent and tired of fiscal belt tightening elect themselves a new ‘master of lolly scrambles’ via Labour.

    Prediction is for a great economic performance this year…

    National goes into the election …. I know we’ve been restraining spending for almost 6 years but we have turned around the outlook of ‘perpetual deficit’ in just 6 years…. Restraint is still needed to create solid foundations for the next few decades of [ insert vision statement here ]

    Labour goes into the election…. Blah blah rich pricks getting fat on workers. The economy is in surplus and business are in profit. Now is the time to hike taxes and increase government spending. You, the workers have been tightening your belts long enough, now we get to enjoy the fruits for [ insert vision statement here ]

    Who wins ?

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