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Frequently Asked Questions about Electricity Rates
❓What’s the difference between fixed, variable, and spot pricing?
- Fixed rate: Your price per kWh stays the same for your contract term.
- Variable rate plans: Prices can change when the provider adjusts its rates, often in line with wholesale energy costs.
- Time-of-use plans: You pay different rates depending on when you use power (cheaper overnight, higher during peaks).
- Spot pricing: Your rate fluctuates with real-time wholesale prices. This can mean savings during off-peak times but higher costs during spikes.
❓What is a “fixed charge” and why do I pay it every day?
The daily fixed charge helps cover network maintenance and connection costs. You pay it even if you don’t use any electricity that day a bit like a line-rental fee for staying connected to the grid.
NZ also has low-fixed-charge plans for households that use less than 8,000 kWh per year (9,000 kWh in the lower South Island). These plans charge a smaller daily fee but a slightly higher unit rate.
❓Why do different regions have different electricity prices?
Each part of NZ has its own distribution network, and the cost of maintaining it varies. For example:
- Remote or rural lines cost more per customer to maintain than city networks.
- Some networks (like Wellington or Auckland) have more underground cabling pricier to upgrade but less storm-prone.
That’s why someone in Dunedin might pay different rates from someone in Hamilton, even with the same provider, being or other.
❓How to Tell if You’re Getting a Good Electricity Deal?
When comparing electricity plans, look beyond just the headline price. Here’s what to review carefully:
- Unit rate (¢/kWh): This is the price you pay for each unit of electricity used — the lower, the better.
- Daily charge: A fixed cost added each day, regardless of usage. Compare these across providers.
- Time-of-use plans: You pay different rates depending on when you use power (cheaper overnight, higher during peaks).
- Contract term and exit fees: Check how long you’re locked in and what it costs to leave early.
- Discounts or bundle offers: Some plans include perks for paying on time or combining electricity and gas.
- Service reliability and app tools: Consider the provider’s reputation for customer support and whether they offer helpful online or mobile account management.