The most common factors Kiwis look at when comparing power companies are the rates and estimated cost savings between providers. The charges we pay for electricity are made up of a few different components, and depending on your preference, the way you pay for power can vary, too. In this guide we’ll break down the most typical rates you’ll come across when researching power companies.
Hold on one second! Are you looking for information on Powershop’s pricing specifically?
This page is intended as a broad guide about NZ’s power industry. If you want to know more about Powershop’s pricing, you should check out our dedicated Pricing page, where you’ll find all the information you need about us.
On this page, you'll learn things like:
- What spot pricing is and why to be careful with it.
- Why termination fees are charged by some retailers.
- The difference between standard and low daily charges.
Daily Charges
The ‘daily charge’ part of your power is a set amount the retailer charges to cover the costs of supplying electricity outside of your kWh usage. You can think of daily fixed charges as the cost you pay for having access to power supply in your house. These rates are determined by where you are in New Zealand and are largely set by the companies responsible for distribution of the power.
Powershop's daily charge includes a direct pass through of the daily network / distribution costs, as well as our own charge to cover staffing costs, metering, and app development. Generation is only passed through in the kWh charges.
Regions around NZ all have varying costs associated with getting power to homes and businesses, affecting that fixed charge amount. Your daily rates may change periodically, depending on the fluctuations in costs set by distributors or the EA levy.
These rates are based on your usage level - low or standards. More on this in a bit…
kWh Rates
The other type of charge you’ll see on your bill are the per/kWh rates. These are directly tied into your usage, paying $X per kilowatt hour your home uses. The power retailers like Powershop set these rates and they will fluctuate between brands. Each power company will have their own $/kWh rates. They can be a good first reference point to work out which retailer is cheaper or more expensive, but shouldn’t be your only deciding factor.
The kWh rates are set by your power company and will factor costs associated with your actual usage - like the wholesale cost of power your retailer paid and distribution costs from your network company. If you are a high user of power then even a few cents difference in a kWh rate between retailers can mount up over a year.
Low User vs Standard User rates
New Zealand introduced regulations in 2004 that required providers to offer ‘low user’ pricing options for households to encourage efficient and conservative use of power. That’s why you’ll come across low and standard user rates for all retailers you research.
It’s worth noting that from 1 April 2022, Low User fixed charge regulations will begin to be phased out. This Ministry for Business, Innovation and Employment webpage explains the plan in detail, including the Government’s reasons behind the change.
You can read more about what that means for Powershop customers here.
So what does low usage actually count as?
If you live north of Christchurch in New Zealand, 8,000 kWh of power a year or under is what’s considered ‘low’ usage. If you are in Christchurch or further south (excluding the West Coast), this threshold is 9,000 kWh.
So anything over those amounts, and you’re in the ‘standard’ user category.
How do I save by being on one option or the other?
Low User vs. Standard User options are reflected in the price you pay for both fixed and per kWh charges. It’s fairly straightforward:
- Low User – you pay less for your daily fixed charges but more per kWh – favouring a household that uses a low amount of power.
- Standard User – you pay more in daily fixed charges but less per kWh – an option that expects a higher degree of power usage.
Do a review of your electricity usage over the past year - your current retailer will be able to tell you how much you used in total in the last year. If you sit under 8,000 kWh and don’t expect the next year to be different, make sure to compare pricing plans for Low User plans rather than for Standard Users.
Peak usage
Peak power usage refers to the times of day when there’s the most demand on the grid for energy supply by households and businesses. When power demand is at its ‘peak’ this requires generators and transmission to work harder to supply energy when it’s needed. This generation and associated maintenance can come with additional costs which are passed to the retailer and their customers. That’s why the government and the industry encourage Kiwis to conserve power and find ways to use less at peak times.
For example, in the Wellington Electricity network peak times are 7am to 11am and 5pm to 9pm weekdays.
Off Peak usage
Off peak is any other time of the day or week where there isn’t the significant demand placed on the grid of peak times. This includes weekdays while many Kiwis are at work and school, overnight while NZ sleeps, and the weekends when everyone’s out and about.
For example, in the Wellington Electricity network off-peak times are 11am to 5pm and 9pm to 7am weekdays. And all day, weekends.
Time of Use Rates
So, why is peak/off peak worth understanding? There’s many reasons, including staying conscious of our collective demand on generation. But for many comparison shopping Kiwis, peak and off peak habits can be used to drive savings on the bill.
Power companies offer a number of arrangements for customers when it comes to how you pay for power during the week. If you’re a household that can run on the majority of power off peak, you may be able to get on a plan that saves you money for doing this. There’s also the opposite, where you pay less at night but more during the day. The best plans are those that accurately reflect your lifestyle, otherwise you could find yourself paying quite a bit more than you should.
Termination fees
If you are considering a power company with a fixed term contract, e.g. 12 months, then you are going to want to know what the fees would be should you need to cancel. There are many reasons why a customer may suddenly need to stop with a power retailer, so even if you don’t expect your circumstances to change during the contract period, don’t gloss over the terms and conditions.
Termination fees are most commonly associated with breaking the contract and are designed to help the power company recoup on some lost revenue due to you leaving. However, in some promos, you may have got a joining gift, in which case termination fees may also include paying off the cost of that too.
While Powershop don’t do fixed plans (just not our style), they are out there. Please take your time and know exactly what you’re signing up for, before you do it.
Spot pricing rates
Spot pricing is the concept of consumers paying for their power at a rate determined by what the wholesale market is doing. These prices are updated every half hour, meaning retailers and spot pricing customers pay a range of rates over the day/month/year.
Usually, a power company will charge you a set rate (for a period of time) for your usage, which has built in room for seasonal and market fluctuations in wholesale power price. In that model, you’re somewhat ‘protected’ from big spikes, but won’t benefit when energy is cheap for retailers to buy. If a customer goes with a retailer and plans offering ‘wholesale’ or ‘spot’ pricing, they are able to get the benefit of savings when power is cheap to buy. However, when power costs a lot – like in winter or at peak usage times nationally, the wholesale price goes up for retailers – and you.
We don’t offer spot pricing ourselves, but if you do go in this direction you should make sure you’re actively monitoring and managing power usage during the more expensive times.
