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Energy Hardship Update - March 2022
Kia ora, welcome
Nau mai, haere mai ki Energy Hardship Update, our first issue for 2022.
We hope you are keeping safe and well in these uncertain times. We know many people are finding it extra tough right now as food, petrol and power prices rise. These changeable environments are making the work to reduce energy hardship – by community groups, electricity retailers, NGOs and government agencies – all the more important. This e-news provides an update of some of MBIE’s work in this space, as well as a note from the Chair of the independent Energy Hardship Expert Panel.
Energy Hardship Expert Panel – Letter from the Chair
Ko Waikato te awa
Ko Maungatautiri te maunga
Ko Tainui te waka
Ko Ngāti Raukawa te iwi
Ko Ngāti Māhana te hapu
Ko Whakaaratamaiti te marae
Ko Keri Brown tōku ingoa
I’m a Councillor at Hutt City Council, Hutt Valley DHB board member, and late last year I had the honour of being appointed Chair of the Energy Hardship Expert Panel.
I’m excited to be working alongside 4 very knowledgeable and driven individuals on the Panel to provide advice and recommend policy priorities to government.
The Panel’s diverse experience and expertise stands us in good stead as we dive deep into the underlying issues of energy hardship and take a long hard look at how they can be resolved.
My fellow panel members are: Dr Amanda-Lanuola Dunlop, Vaka Tautua chief executive; Helen Leahy, Te Pūtahitanga o Te Waipounamu pouārahi (chief executive); Kay Brereton, long-time beneficiary advocate; and Kevin Angland, ex-Mercury and former ERANZ director. You can read more about their previous roles and experience here:
Energy hardship expert panel and reference group
I want to acknowledge the incredibly challenging times we’re in. The global pandemic has proven not just a threat to public health, but brought with it high inflation, job losses, mental and emotional strain, and much more. There’s already a lot of work underway around the motu helping households experiencing energy hardship – especially at grassroots-level. And I’d like to thank those who have been working to help others, even when Covid makes it harder to do so.
The Panel’s immediate focus has been developing a work plan for the next 18 months. This means getting a solid understanding of the mahi already underway by community groups, businesses and government agencies. We’re fortunate in that we can also draw on earlier research, analysis and wider engagement in this space, as well as our own experiences working with disadvantaged households.
Over the coming weeks, we will meet with key stakeholders to test the critical focus areas of our work plan and understand any gaps before presenting it to relevant Ministers. From there, we intend to run workshops to develop options for addressing priority issues in each focus area, which will then go out for public consultation in a discussion paper.
As you can see, we have a multi-stage approach to engagement, and as our work progresses we’ll provide details in this e-news for ways you can take part.
Throughout our work, we’ll be connecting with the new Energy Hardship Reference Group. The Group has a much larger membership and is designed as a platform to share ideas and information – which will be vital for informing our work.
I welcome your views on ways of lifting people out of energy hardship. We would also love to hear from you if you’re part of an energy hardship initiative you’d like to tell us about. Please feel free to contact the Panel by emailing energymarkets@mbie.govt.nz
Ngā mihi
Keri
Twelve clean energy projects for Māori housing to receive funding
Another 180 Māori households will soon be able to access clean and cheap power as part of the second funding round of the Māori Housing Renewable Energy Fund.
This Fund is designed to trial small-scale renewable energy projects that improve energy affordability for disadvantaged households.
Last week, Ministers announced the 12 new renewable energy projects around the country to receive a combined $2.3 million.
These include 2 geothermal energy projects, a feasibility study into a smart-grid to support a 500ha Māori community on Great Barrier Island, and a project that has teamed up with Victoria University of Wellington researchers that will investigate using solar to heat hot water for energy storage.
The Douglas family in Rotorua have much cheaper power bills thanks to Te Arawa Whānau Ora’s solar panel project.
Some of the 12 projects being funded also support broader benefits, such as bringing energy independence to remote communities, supporting Māori energy businesses, building skills, and enabling mana whenua to return to traditional energy sources.
Most of the projects funded in Round 1 have been completed and results so far show huge savings for households. One funding recipient, Te Arawa Whānau Ora, reports the 14 whare involved in its solar project reduced monthly power bills by between 30 to 50% over summer. Another project by Manaaki Energy estimates its solar project will save households about $1000 a year.
The third and final funding round, worth $9 million, is currently open and all applications must be received by 30 April.
This is a 2-week extension for those wishing to submit an Expression of Interest for smaller-scale projects seeking up to $400,000. Smaller-scale projects must support at least 4 houses. The deadline to submit a Request for Information application form for funding a larger-scale project (between $400,000 and $2 million) must also be received by 30 April.
The Fund is one-half of the $28 million Māori and Public Housing Renewable Energy Fund.
Visit the our website for more information on the Round 1 and 2 projects, details on how to apply for Round 3 funding and to view the Ministers’ announcement.
Defining energy hardship – taking on feedback
Late last year, MBIE held a public consultation asking for feedback on our draft definition of energy hardship and ways it can be measured. We received more than 60 submissions from a range of people and groups including charities, iwi, hapū and Māori organisations, researchers, energy retailers and distributors. This is after extensive research, workshops with external experts and wānanga undertaken to develop the draft definition and potential measures.
The quality and diversity of experience in the feedback will enable us to consider a broad spectrum of viewpoints, experiences and areas of expertise. We’re in the process of reviewing the submissions and aim to release a summary on the MBIE website in the next few weeks. This will be in addition to feedback received during wānanga with iwi and Māori groups held late last year. The feedback from the consultation and wānanga will enable us to further refine and finalise a generally accepted definition and measures of energy hardship that can be used in Aotearoa by the government and others.
What’s happening with low fixed charges on power bills?
In 2021, the Government decided to phase-out the Low Fixed Charge regulations (over 5 years) from 1 April 2022. This is following a recommendation from the 2019 Electricity Price Review, which found the regulations were not very effective at helping lower-income households and had unintended consequences. The phase-out allows power companies to gradually increase the maximum daily fixed charge on low-use plans by 30 cents each year for 5 years.
It is expected that as the daily fixed charge gradually rises, changes to the variable rate (the rate paid for the actual electricity used) will be lower than they otherwise would be in the face of other factors such as increased wholesale costs, which also have an impact on retail prices. The phase-out period of 5 years has been introduced to help limit the impact on consumers’ electricity bills.
About 60% of all households are expected to have lower power bills during the phase-out than they otherwise would, as the lower rate for electricity used has a greater impact on their overall power bill. These households are likely to be those on standard-use plans and those on low-use plans using more than 6,500kWh per year.
About 40% of all households are expected to face higher power bills during the phase-out. These are households on low-use plans using less than 6,500kWh per year. As there is some uncertainty on how industry will structure these changes, there will be a midpoint review of the phase-out to consider its effects, especially on low-income and low-use households.
Government secured industry commitment to develop and fund a $5 million power credits scheme to support low-income, low-use households who are struggling to pay their power bills through the phase-out. Any such households should contact their power company for information and support. Participating power companies may be able to offer a power credit towards their power bill once the scheme opens.
Households are encouraged to contact their power company to check they are on the best plan for their situation. Some power companies may continue offering pricing plans with relatively low fixed charges. Households could also compare the prices and services of different retailers. New Zealand has a number of third-party methods for consumers to estimate energy usage and compare prices such as Powerswitch.
Find out more
See the Energy Hardship webpage for more information about our work and progress updates
Contact us
We welcome any thoughts or questions about this area of work, and any interest you might have to be involved. For further information, please contact the Energy Markets Policy team by emailing energymarkets@mbie.govt.nz
This update is brought to you by the Energy and Resource Markets (ERM) branch, part of the Ministry of Business, Innovation and Employment. ERM is the steward of 2 regulatory systems, the energy
system and the Crown-owned mineral and petroleum system. These systems are connected – we need resources to make energy and we need energy to extract resources.
