{"id":236572,"date":"2026-01-16T16:22:11","date_gmt":"2026-01-16T16:22:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/236572\/"},"modified":"2026-01-16T16:22:11","modified_gmt":"2026-01-16T16:22:11","slug":"rising-power-bills-and-gas-crunch-set-to-ignite-2026-election","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/236572\/","title":{"rendered":"Rising power bills and gas crunch set to ignite 2026 election"},"content":{"rendered":"

Household prices increased by an average $10 a month in April 2025, reflecting rising levels of investment need for the electricity network.<\/p>\n

The Commerce Commission, which is responsible for regulating how much national grid operator Transpower can charge, said from 2026 to 2030 increases were still likely but would be smaller.<\/p>\n

While the parties are yet to announce their positions on power, there\u2019s a degree of uncertainty hanging over the sector going into the election, which is expected to be held around October or November in 2026.<\/p>\n

But Forsyth Barr senior analyst Andrew Harvey-Greene said the markets don\u2019t seem to be overly concerned about power right now.<\/p>\n

The talk in 2025 had been about separating out retail operations from the big four power generators, and re-nationalising the partly-privatised generators<\/a> Mercury, Meridian and Genesis.<\/p>\n

\u201cThere\u2019s a question mark on how achievable some of them are \u2013 particularly, renationalisation \u2013 given the costs involved, which are significant [Forsyth Barr estimates about $20 billion].<\/p>\n

\u201cAnd I\u2019m in the camp that says separation of retail and generation certainly won\u2019t achieve what the proponents are expecting [lower power prices] in my view,\u201d Harvey-Greene told the Herald.<\/p>\n

Intense scrutiny<\/p>\n

There have been several reports looking into the power sector, which have come under even closer scrutiny since wholesale prices spiked to $820 per megawatt hour in winter 2024.<\/p>\n

In response, the Government issued a policy statement to focus the Electricity Authority on security of supply and affordability issues.<\/p>\n

In October, a Government-commissioned Frontier Economics report was released.<\/p>\n

Around mid-2025, the generator-retailers signed a ground-breaking <\/a>deal to back up a large strategic coal reserve and allow Genesis to run a third steam-turbine Rankine unit at Huntly.<\/p>\n

That has gone a long way to assuage security of supply issues, but the Major Energy Users Group (MEUG) said the response to affordability challenges in 2025 left many dissatisfied \u2013 including many politicians across the political spectrum.<\/p>\n

\u201cWith households facing another round of transmission- and distribution-driven price increases in election year, and with cost-of-living issues likely to be the top issue in the election, we will have another year of uncertainty over the stability and predictability of our market,\u201d MEUG chair John Harbord said in a report for 2025.<\/p>\n

\u201cElection policies will likely cover the spectrum, from largely leaving the market alone on the theory it will self-correct, to far-reaching government intervention in the belief that the market is incapable of self-correcting,\u201d Harbord said.<\/p>\n

Harvey Greene noted that the much-vaunted Frontier report<\/a> said there was nothing, structurally, that needed changing.<\/p>\n

The one definitive move to be made in 2025 was the Government\u2019s announcement that it would be prepared to participate in future capital raisings in the three partly stated-owned companies \u2013 Mercury, Meridian and Genesis.<\/p>\n

The Government\u2019s willingness to participate in future capital raisings marked the biggest change in its investment settings since the companies a little over a decade ago, Forsyth Barr said.<\/p>\n

On that score, Genesis Energy<\/a> would appear to be a potential beneficiary of a capital raise, given that its debt is relatively high compared to the others, Harvey-Greene said.<\/p>\n

\"WillWill LNG imports be the answer to New Zealand’s declining gas reserves? Photo \/ Getty Images<\/p>\n

The importation of liquefied natural gas (LNG) \u2013 to alleviate rapid decline of reserves in New Zealand \u2013 remains a live issue, and the Government is expected to soon make an announcement on possible LNG procurement.<\/p>\n

Harvey Green said there were a number of challenges with LNG, aside from the sheer expense of it.<\/p>\n

The LNG challenge<\/p>\n

\u201cWithin the electricity space, and there\u2019s a high risk \u2013 whether it\u2019s LNG or whether it\u2019s something else like diesel peaking \u2013 that it may not actually ever be needed,\u201d he said.<\/p>\n

He said it was possible that New Zealand could go for five to 10 years without actually needing backup generation offered by gas, given the deal that\u2019s been done to keep Genesis Energy\u2019s ageing Rankines going with an enlarged coal stockpile.<\/p>\n

\u201cThat [Strategic Energy Reserve Huntly Firming Option] deal will be the first thing that gets called on and, then there are other market arrangements in there such as the demand response deal with the NZAS smelter at Tiwai Point.<\/p>\n

\u201cThe other key thing is that there is a very large coal stockpile at Huntly now compared to winter 2024, when there wasn\u2019t much coal on the ground, which was one of the issues that it caused problems there.<\/p>\n

\u201cEveryone is very aware of the gas market situation now, so the market arrangements are in a much better place.\u201d<\/p>\n

The market can also expect a lot more power generation to come on stream.<\/p>\n

Over the summer months there\u2019s going to be another 100 megawatts of geothermal generation come to the market, minimising the risks of running out of water.<\/p>\n

For the moment at least, the system looks to be very safe \u2013 wholesale power prices are low because of heavy rain and snow melt in the South Island.<\/p>\n

In the run-up to Christmas, wholesale power prices were extremely low \u2013 reflecting full southern hydro lakes and mountain snow melt.<\/p>\n

On December 17, the wholesale price at Benmore was just $2.25 per megawatt hour \u2013 a far cry from 2024\u2019s $800-plus peak.<\/p>\n

Prices have stayed low. This week, prices at Benmore howevered around $10MWh.<\/p>\n

Harvey-Greene noted that power bills will be on the rise over the next few years \u2013 more a reflection of increased lines charges than actual power prices.<\/p>\n

\u201cEverything that\u2019s been talked about in the electricity sector is focused on the generation and retail side, but that\u2019s not actually what\u2019s driving up electricity prices next year or the year after,\u201d he said.<\/p>\n

Future prices<\/p>\n

ASX power price futures point to wholesale prices easing over the next few years, reflecting the impact of a high number of new power projects coming on stream.<\/p>\n

In a report, Harvey-Greene and Forsyth Barr analyst Hugh Lockwood said they believed the political risks to the current setup would be lower in 2026 than in 2014, when Labour and the Greens had a single-buyer model policy.<\/p>\n

However, they said the risk was likely to be a headwind for a positive re-rating of the generator-retailers and they had pulled back their stock valuations accordingly.<\/p>\n

The political parties are yet to release their policies on policy.<\/p>\n

However, there have been sufficient comments to provide an understanding of expectations.<\/p>\n

\"AA deal between the big four power generators in 2025 will help support the national grid. Photo \/ NZME <\/p>\n

The most significant potential policy is the renationalisation of the generators \u2013 an idea advanced by NZ First minister Shane Jones.<\/p>\n

\u201cIn our view, it will be very hard to implement and, at current market valuations, cost about $20b,\u201d Harvey-Greene and Lockwood said.<\/p>\n

\u201cSo long as investors are compensated at market value, there should be limited downside risk.\u201d<\/p>\n

Forsyth Barr said a wet winter and avoidance of a repeat of 2024 would also help to keep electricity out of the headlines next year.<\/p>\n

The Frontier report, released on October 1, is the latest in a long line of studies into the electricity market.<\/p>\n

None of the eight major studies since 2000 have concluded that the electricity market is broken or that it needs to be replaced with something else.<\/p>\n

Frontier said: \u201cIn general, the market design works well, provided there is enough capacity and energy, so we do not see a need for fundamental changes to the design of wholesale markets.\u201c<\/p>\n

Most of the studies have been tasked to look at security of supply and\/or electricity-price concerns.<\/p>\n

These two issues were aspects of the energy \u201ctrilemma\u201d \u2013 energy security, affordability and sustainability \u2013 that were inherently difficult to solve simultaneously.<\/p>\n

\u201cIf nothing else, the eight studies have taught us there is no easy solution \u2013 and arguably no smoking gun,\u201c Harvey-Greene and Lockwood said.<\/p>\n

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n

Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"Household prices increased by an average $10 a month in April 2025, reflecting rising levels of investment need…\n","protected":false},"author":2,"featured_media":236573,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[2246,95,6726,26695,33404,5903,1686,16460,42,108722,76,663,43,10112,801,12975,1551,61,40,38,41,39,2963],"class_list":["post-236572","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-2246","tag-and","tag-become","tag-bills","tag-crunch","tag-election","tag-electricity","tag-gas","tag-headlines","tag-ignite","tag-issue","tag-looks","tag-news","tag-power","tag-rising","tag-sector","tag-set","tag-to","tag-top-news","tag-top-stories","tag-topnews","tag-topstories","tag-zealands"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/236572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=236572"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/236572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/236573"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=236572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=236572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=236572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}