Energy affordability

Ian McChesney

Christchurch household electricity cost increases "standard" tariff

0

500

1000

1500

2000

2500

Apr-92

Apr-93

Apr-94

Apr-95

Apr-96

Apr-97

Apr-98

Apr-99

Apr-00

Apr-01

Apr-02

Apr-03

Apr-04

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Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

$ pe

r ann

um

5,000kWh pa 10,000kWh pa

% HH income on HH fuel & powerexcluding zero incomes

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1 2 3 4 5 6 7 8 9 10decile

2001 survey

2004 survey

2007 survey

Fuel Poverty

Inability to afford a sufficiency of energy services

• In the UK a household is in fuel poverty if 10% or more of income is needed for energy

• NZ households perform poorly when analysed according to the UK definition

What can be done?

1. Use less energy

2. Pay less for energy

3. Gain more income

1. Using less energy

• Energy efficiency– Insulation and heating…Warm Up NZ/Heat Smart

project

– Non subsidised actions – hot water, double glazing, wall insulation, lighting, appliances etc.

• Conserve– ‘Voluntary conservation ‘ - turn off when not in use,

avoid waste

– ‘Involuntary conservation’ - can have adverse effects

2. Paying less for energy

• Cheapest form of energy e.g. electricity vs gas vs wood?

• Cheapest electricity supplier – Powerswitch

• Best tariff option

From Consumer

Cost for 10,000kWh - from Powerswitch Website http://www.consumer.org.nz/powerswitch

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Powershop GenesisEnergy

MercuryEnergy

ContactEnergy

MeridianEnergy

TrustPower

Share of market held by incumbent

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Jun-

08

Jul-0

8

Aug-

08

Sep-

08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr-

09

May

-09

Jun-

09

Jul-0

9

Aug-

09

Sep-

09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Auckland

Sth Canterbury

Orion area

National Average

Dunedin

Price effect of different tariff options - 5,000kWh per year

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Anytime Economy 24 Day/Night Economy 24 Night

Standard Low User

3. More income

• Entitlements

• Income gaining opportunities

• Narrowing the income divide

Tackling energy unaffordabilityPolitical pressure

e.g. electricity pricing, rental standards, recognition of energy poverty trap

Become well informed

– Become an ‘active consumer’

– Take advantage of what is available

Assistance is needed:

– with capital expenditure

– with advice

Comparative electricity trends of the three main sectors 1999-2007

Residential Commercial Industrial

GWh Price Revenue GWh Price Revenue GWh Price Revenue

c/kWh $M c/kWh $M c/kWh $M

1999 11,290 11.61 $1,311 7,334 9.72 $713 14,010 6.98 $978

2000 11,057 11.87 $1,312 6,919 10.11 $700 14,759 5.94 $877

2001 11,306 11.76 $1,330 6,899 10.31 $711 15,142 6.31 $955

2002 11,660 12.86 $1,499 6,964 10.16 $708 14,525 6.71 $975

2003 11,723 13.82 $1,620 7,734 10.79 $834 15,431 7.23 $1,116

2004 12,254 14.84 $1,818 7,389 12.01 $887 16,151 8.10 $1,308

2005 12,161 16.68 $2,028 7,975 12.35 $985 16,190 7.56 $1,224

2006 12,231 17.29 $2,115 8,383 13.53 $1,134 16,780 9.13 $1,532

2007 12,731 18.59 $2,367 8,990 13.94 $1,253 16,825 9.22 $1,551

Increment 1999 to 2007 1,441 6.98c $1,056M 1,656 4.22c $540M 2,815 2.24c $573M

Average increase 1999 to 2007 (% pa) 1.5% 6.1% 7.7% 2.6% 4.6% 7.3% 2.3% 3.5% 5.9%

Canterbury Home Energy Advice Centre (HEAC)

FREE, independent and impartial advice on energy use in the home– Insulation– Heating options– Saving money on power bills– Finding the best energy plan– Choosing the best appliances– Investment decisions– Applying for financial assistance

HEAC contact details

• E-mail Enquiries canterbury@energyadvice.org.nz

• Online Enquiry Formwww.energyadvice.org.nz

• Freephone 0800 388 588