Updated 24th July 2024
Electric Kiwi has made the decision to stop accepting new electricity customers due to extremely elevated wholesale energy prices. This also means that, for now, only existing customers can join broadband with Electric Kiwi.
Wholesale energy prices have increased by 73% in the past 6 months* and current wholesale energy futures prices (these are the products that we buy in order to supply energy to our customers) have now reached a point where every new unhedged customer would be loss making for our business.
Obviously we are very disappointed. Electric Kiwi entered the market to make it better for Kiwis. Over the years we have saved Kiwi families millions, and brought heaps of innovations to market (from time-of-use plans, to the Hour of Power, the green meter and more). We’re gutted that we are now turning customers away.
What the hell is going on?
The wholesale market in NZ electricity has been a basket case for years. Wholesale prices have been steadily rising, and calls from us and others for market reform have fallen on deaf ears. In 2023 we raised a complaint with the Commerce Commission regarding misuse of market power in New Zealand energy markets.
The Commission agreed there was an issue but passed responsibility for resolution to the Electricity Authority who have the policy tools to quickly enact market reform. Commissioner John Small has stated^ “The wholesale electricity market is of real concern…we think it’ll be much faster [to work with the Electricity Authority] than dragging four or five big companies through the courts for three years and then be told that three years ago what you did was illegal. That doesn’t solve anything”.
Yet what has the Electricity Authority done to address this urgent problem? A year on and nothing has happened.
When we raised the complaint in 2023, the ASX baseload futures prices for calendar years 2024 and 2025 were around $165, this is now $298 and $277 respectively. If that is not evidence of something being properly stuffed, we are really not sure what is. And that’s before you take into account that during peak demand periods (mornings and evenings when we’re all using the most energy) prices can be multiples higher.
Below is a graph showing the wholesale prices since 2013. As you can see the upward trajectory is pretty full on and futures prices increased 17% just last week. And all of this is happening while the big four Gentailers (Mercury, Contact, Meridian and Genesis) make record profits. In FY22 they made $1.9bn, in FY23 they made $2.2bn and all indications are that they’re on track for even more massive profits in FY24.
^John Small, “Nine to Noon” interview by Kathryn Ryan, Radio New Zealand, July 24, 2024.
Chart shows the average annual baseload prices at the Otahuhu node (north island reference node). For the period Jan 2013 to June 2024 actual spot prices have been used and for the period July 2024 to Dec 2025 the current ASX futures price has been used (as at 15 July and 23 July 2024)
We are not the only ones screaming out for change. NZ is in a great position to provide green energy at reasonable prices for Kiwi households and businesses, which would encourage further investment in our economy and keep NZ the best place in the world to live.
A market controlled by a few players (the big four gentailers), who are highly incentivized to keep supply tight – and who hold all the power when it comes to providing energy during those critical peak times – is not going to get NZ where it needs to go.
In the end, these wholesale prices are passed through to Kiwi households and businesses. So we should all be pissed off, and we should all be demanding action.
So what’s next?
For the benefit of all Kiwis, something has to be done. We have informed both the Electricity Authority and the government on why we have taken this decision. And we hope this time that they have a mind to do something about it.
In the meanwhile, we will stay closed to new electricity customers.
FAQs
Why are you not accepting customers?
The wholesale price of energy, that is one of our biggest input costs, has reached a point where it is no longer commercially realistic to continue to acquire customers. For every existing customer we have, we have locked in some of our future input costs, but we need to keep buying forward contracts for those customers (to cover their future energy use), and these prices are extremely high.
If I am an existing Electric Kiwi customer, can I still move house?
Yes. If you are moving, you can do this via the app, or your online account. If you have a unique situation (e.g. you are moving, but a new person is taking the account), just jump on chat and we can sort this out for you.
Can existing customers still join broadband?
Yes. You can do this via your online account.
Can new customers join broadband?
No. At the moment we only allow people to join broadband if they have power. This is a technical restriction that we are planning to resolve. But for now that means that only existing customers can join broadband.
How long will this continue for?
It’s hard to say. At this point we are assuming it could be a month or more. But if things stay the same or get worse it could be longer. You never know, the government and the Electricity Authority might decide that it’s time to finally do something about the broken wholesale market?!
*This refers to Calendar year 2025 futures price increases over the past 6 months.
