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Electricity consumers in New Zealand have dealt with some of the sharpest electricity price increases in the world over the past 20 years.

Kiwi power tariffs now average on a global scale, but in 1990 they were the eighth lowest.

New Zealands annual power prices have increased more than 15c per KiloWatt hour  over the last 20 years , from 9.2c per kWh in 1990 to 25.5c at the end of 2010. That’s compared with a rise of less than 2c per kWh in Australia and around 3c per kWh in the USA.

In 2010 Australians were paying on average 14.83c while for New Zealanders, electricity was retailing for between 22.7c and 24.97c per kWh. Since this comparison was made, New Zealand prices have risen as high as 29.25c per kWh , showing that Kiwis are consistently paying considerably more than the Australian neighbors.

Basil Sharp, University of Auckland head of economics and the head of the New Zealand Energy Centre, said the increase in electricity prices was due to a growing economy.

“If you look at the historical relationship between consumption of energy and growth in GDP, when the economy is growing demand for electricity grows. When the demand is increasing you pay more for it.”

He said another factor was that most of New Zealand’s hydroelectricity had been developed and the next step would be other sources of generation, such as more expensive renewable sources. Australia had coal, which would seem cheap, barring carbon taxes.

But Sharp advises that people should be careful of making international comparisons. Government subsidies of $63.5 Billion were being given to the electricity sector globally every year. Although some countries are paying less for electricity, taxpayers are still paying for it via subsidies whereas New Zealands’ supply in unsubsidized.

Genesis Energy’s public affairs manager Richard Gordon said that the global comparison was meaningless, stating “New Zealand has a very esoteric electricity system that is structurally different from most other countries – mostly renewable generation with some thermal fuelled mostly from local fuel supplies, no shared borders and no cross-border transmission, and a long narrow transmission system.

“New Zealand electricity prices are driven by the local environmental and market conditions.”

Source: Stuff.co.nz