- Phasing in a mix of prices depending on the time of day you use electricity
- Changing the proportion of fixed prices so the charges are more uniform
- Looking at a new option for how we allocate capital investment costs
Why is Aurora Energy changing how electricity distribution prices are charged?
We want to position our network for the future and activity support a decarbonised future through our network, and enabling customers to make ‘green’ choices is part of that.
For over 100 years our residential prices have largely been based on the amount of electricity you consume, regardless of when you use it. We’re proposing some changes that will send customers better price signals in the future, so they are more in control of the choices they make. We want to give customers more choice in how and when they use electricity, including whether to make energy-related investments like solar panels, batteries and electric vehicles.
What are proposed changes to electricity distribution pricing?
We’re looking at three main changes:
If people are using more electricity, why can’t you build a bigger electricity network?
Rather than just build more poles and wires to meet demand, we’re proposing pricing incentives that encourages shifting electricity consumption into off-peak periods. Lowering peak demand will delay or even avoid network investment, and ensures that prices can be kept as low as possible for everyone.
What do you mean by phasing in a mix of prices depending on when you use electricity?
Moving to time-of-use pricing from 1 April 2023 means you’ll have options to pay less if you use power at off-peak times, or pay more when you use it during peak times. For example, you can choose to save money by charging your electric vehicle overnight, or setting the dishwasher and washing machine for off-peak times.
What are the changes you’re proposing to fixed charges?
Like all electricity distribution companies, Aurora Energy has costs that are largely fixed and independent of the amount of electricity that is transported through the network. Under the existing arrangements of low fixed charges and higher variable charges, network costs are being over-recovered from high users and under-recovered from low users. We want to increase the proportion of fixed charges to reduce this inequity.
What’s the new option for allocating capital investment costs?
In summary it means that, for example, if one of the pricing areas (Dunedin, Central Otago or Queenstown Lakes) has 40% of the electricity network’s asset value, then customers in that area will pay 40% of Aurora Energy’s overall investment-related costs. However, for overhead costs such as network engineering planning, our 24/7 control room and our business support functions like accounting, those costs will be spread across the entire network, regardless of location, meaning that all customers receive the benefit of network scale.
Why don’t all electricity retailers show the breakdown on their bills?
Our distribution charges are billed to electricity retailers, who choose how those charges are passed on to customers. We know that some electricity retailers transparently pass through our charges, while others repackage our charges as they see fit.
Because electricity retailers combine several costs, including wholesale energy costs and distribution costs, there is no guarantee that our new distribution prices would pass transparently through to your electricity bill.
What’s an electricity retailer in comparison with Aurora Energy, who is an electricity distributor?
Several companies work together to supply your electricity, from generation and transmission to sending you your power bill. The below diagram shows where Aurora Energy fits in.