electricity prices effective from 1 april 2023

Pricing Disclosure pursuant to Electricity Distribution Information Disclosure Determination 2012 (consolidated 2021). 

Vector’s line charges include the cost charged to Vector by Transpower for delivering electricity across Transpower's national grid to Vector’s network and the price relating to the cost of delivering electricity across our distribution network. Generally, we bill our Line charges to electricity retailers. Electricity retailers then bill you. The line charges electricity retailers charge you may not be the same as what we bill your electricity retailer.

Our annual price changes are limited to that required to achieve the net allowable revenue prescribed by the Commerce Commission in its Electricity Distribution Services Default Price-Quality Path Determination 2020 (DPP) plus changes in pass-through and recoverable costs (e.g. Transpower transmission charges, council rates, statutory levies and other regulatory allowances) and a revenue wash-up from any under or over-recovery from previous pricing years. The transmission component of our charges is approximately 29% of our total line charges. 
 
Price change
From 1 April 2023, our total line charge prices are increasing by an estimated weighted average of 5.8%.
The increase is the result of:

• Vector costs (impact 3.4%)
  • Inflation at the Commerce Commission 2% forecast; and
  • Regulatory adjustments and voluntarily under-charging.
• Pass-through costs (+0.6%)
  • A $5m increase in forecast transmission charges; and
  • A $2m decrease in forecast council rates and statutory levies.
• Volume forecasts (+1.8%)
  • Reflecting current forecast economic conditions and warmer Auckland winters observed over recent years. 

 
Pricing structure changes
Vector’s price structure changes effective 1 April 2023 mainly reflect changes required to implement Transpower’s new transmission pricing methodology (TPM) that removes any peak signal in transmission charges to distributors. Regulations allow Vector to pass transmission costs through to consumers / retailers. Many of our existing prices reflect the transmission peak price signal so are not reflective of the of the new TPM. Therefore, a change in our transmission pricing approach is necessary. At a time of wide-spread cost of living challenges across the community, we have considered end user bill impacts if our prices are passed through by retailers as well as taking into account pricing guidance recently issued by the Electricity Authority (EA).

From 1 April 2023, Vector has moved the recovery of the transmission pass-through costs to bulk grid exit point (GXP) pricing, not tied to individual ICPs (installation control points, which are points of supply connection between local network and the consumers).  The transmission charge price has ceased to be a unit charge and an apportionment approach has been adopted, using the retailers’ historic volume share at each GXP to determine their fixed monthly transmission charges. We believe this approach to transmission cost recovery is more consistent with both how we are charged by Transpower under the new TPM and with the EA's pricing guidance as it is unavoidable, fixed-like and location based. 
The changes to the TPM also have flow on effects to other aspects of our pricing. Our other price structure changes include the following:

• Mass market ICPs
  • Peak price signal only in winter period (01 April – 30 September inclusive),
  • No off-peak volume price for standard residential ICPs and general (SME) ICPs,
  • Low usage residential ICPs fixed daily line charge adjusted to reflect amended regulations,
  • Reduced the price differential between controlled hot water and uncontrolled, and no differential on the Northern network,
  • Introduction of new residential distributed energy resources (DER) pricing to incentivise future load management,
  • Remove dual energy (electricity & gas) residential ICPs from controlled pricing, 
• Commercial ICPs
  • Continue to transition the alignment of prices between the Auckland and Northern networks
  • Introduction of a new sub-transmission consumer group for ICPs that have a connection directly to Vector’s sub-transmission network and/or have paid for their connection assets to a Vector zone substation.

 
For further information on our pricing methodology used to set prices, see www.vector.co.nz/about-us/regulatory/disclosures-electricity/pricing-methodology.
For a full description of our line charges and how they are applied, see www.vector.co.nz/personal/electricity/about-our network/pricing or www.vector.co.nz/business/electricity/about-our-network/pricing.

The following tables are a summary of Vector's Northern and Auckland electricity network line charges. All prices are exclusive of GST.