Power cost up, but supply secure

New Zealand has lost its advantage of relatively cheap power in the past decade, but is ranked third for energy security amongst the top 25 energy users in the world, according to an international report.

Mostly since 1980 New Zealand had benefited from "relatively low electricity rates, but since 2004 that advantage appears to have been lost as rates have crept up to and in some years, slightly above the OECD average," the International Index of Energy Security report says.

Household power prices rose rapidly between 2001 and 2007, well ahead of general inflation, though rises have slowed in recent years. Electricity prices had risen 22 per cent since National came to power, the Green Party said last month.

The global report, out yesterday, says New Zealand's energy security score has consistently been in the top five of the big energy users group.

The report is for the 2012 year, but says more recent trends suggested New Zealand's energy risks were worsening at a slightly faster rate than for the OECD as a whole.

Fuels not be produced domestically had to be imported. The report says New Zealand does not produce "what would be considered large amounts of oil, natural gas or coal," but the latter two were enough to meet domestic demand and support exports of coal.

Compared with the OECD average, New Zealand's import-related risks were better than average for coal and gas and close to the average for oil. That meant spending on energy imports was "quite a bit better than the OECD average".

The power sector is dominated by hydro power, which accounted for more than half of all generation in 2012, with natural gas and renewables accounting for about 20 per cent each.

That meant New Zealand's electricity diversity was better than the OECD average.

But New Zealand also uses slightly more energy, overall and in the transport sector to generate a dollar's worth of GDP than OECD countries on average.

Its carbon dioxide emissions trend was also "somewhat" worse than average, but emissions per capita were in line with OECD trends.

The International Index of Energy Security looks at the security of energy sources in a changing world, including the growth of unconventional shale oil and natural gas, and the Fukushima nuclear accident in Japan.

Norway is the most energy-secure country in the large user group and has been since 2001. Mexico, New Zealand, UK and Canada complete the top five.

"New Zealand is punching considerably above it weight," says Rob Whitney, Chair of the BusinessNZ Energy Council.

"This ranking backs up the result of the 2013 World Energy Council's Trilemma Sustainability Index, which ranked New Zealand eighth out of 129 countries when assessed against pursuit of a balanced policy agenda comprising energy security, energy equity and environmental sustainability," he said.


In 1990 New Zealand electricity prices were well below average for developed countries

Now they have moved to around the average

Since 1990 the average household electricity price has risen from 9.1 cents a kilowatt hour to 27.4 cents

The annual average cost has risen from $725 to $2195

Source: Infratil report, September 2013