News from ERANZ  •  March 2021

Chasing the biggest carbon emissions reductions for the lowest cost

To meet New Zealand’s ambitious net-zero climate target we have a challenge ahead of us – we need to cut 50 million tonnes of carbon dioxide emissions by 2050. That’s equivalent to 650,000 less full return flights between Auckland and Sydney running each year.

The good news is we can do this - if we act now. New Zealand is in an enviable position compared to other countries. Our electricity is already around 85 percent renewable and we have the tools and tech needed to decarbonise and build a cleaner, more sustainable future for all Kiwis.

The electricity sector has a key role to play in New Zealand’s climate change transition. Our electricity is the 6th cheapest in the developed world, which makes it easier to switch from carbon intensive activities to renewable power – so it isn’t just what’s best for the planet but what’s best for you and your back pocket.

Electric vehicles are a good example. Compared to a petrol car the cost of charging an EV is equivalent to $0.40 cents per litre, so switching to a electric vehicle won’t just save carbon, it will also save money - especially as the upfront cost of an EV is expected to fall significantly over the next 10 years.

Switching cars and trucks to electric vehicles and electrifying industrial heat processes (like milk pasteurisation) would drive massive emission reductions – around a third of those 650,000 return flights - at a low cost relative to other options.

The Climate Change Commission’s report highlights the potential extra costs of a strict 2030 100 per cent renewable electricity target for the emission reductions gained. Even with demand increasing, the proportion of renewable electricity is expected to increase significantly over the next 15 years. Pushing for that last few percent could mean a massive extra cost for a small amount of emission reductions gained.

We need to be looking to the experts and all working together for the biggest gains – we’ve already proven we can do this in our response to COVID-19, and we need to take that evidence-based approach for our climate change transition. We can do this.

I wrote an opinion piece for the NZ Herald highlighting the need to push forward quickly, but with care. The scale of change needed makes it vital we make the right changes – driving the biggest emissions reductions at the lowest cost. If we make the wrong choices now we'll be loading extra unnecessary cost on Kiwi families now, or giving future generations an even harder task because we haven't succeeded.

Check out the piece here

All the best,

Cameron Burrows
Chief Executive, Electricity Retailers’ Association

Consumer Care guidelines

ERANZ welcomed the opportunity to provide feedback on the Electricity Authority’s final draft of the Consumer Care Guidelines. We support the vast majority of the provisions within the final draft and look forward to seeing these implemented across the sector for the benefit of consumers. 

Retailers have worked hard to develop systems to help those in hardship manage their debt and avoid disconnection, which ERANZ members have long treated as an absolute last resort. Providing early and proactive support is one of the best ways to ensure families can affordably access the power they need.

The changes to the guidelines were a great opportunity to bring them into line with new technology and practices, and a good chance to evaluate what we can be doing better as a sector. 

Many retailers already go beyond the guidelines in supporting customers through initiatives like EnergyMate, Power Credits, and more. 

We all want a well-functioning sector placing consumer interests first. As a sector we're committed to continuous improvement to how we support customers.

Read ERANZ's full submission here, or by clicking the image above

Kiwi households benefitted from reductions in power prices in 2020 – with the real unit-price of electricity falling to the lowest level since 2012, according to data released by MBIE.

According to the OECD, residential power prices in New Zealand are the 6th cheapest in the developed world.

Unsurprisingly, 2020 saw residential electricity use increase as Kiwis stayed home during Covid-19 lockdowns – with power use up 8 percent between March and June compared to the previous year. This went counter to a long-running trend of falling residential power use, in part as homes become more energy efficient.

That means that in 2020 Kiwis were paying less each time we turned on the lights or the heater – but because of Covid-19 we needed to use more electricity to work, study, and run our homes.

Overall, the average annual household power bill in 2020 was $2118. Since 2014 annual bills have fallen by more than $140, after inflation.

Check out our explainer here, or by clicking the image above

Recently ERANZ appeared on the AM Show to talk about simple home improvements anyone can do that can drive big reductions in power bills over the coming year.

Check out Cameron's interview in the video below.

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