The Blog

The #CleverFlickers Market Update - 26 August 2021

Tēnā koutou Flicksters,

We’re over a week into lockdown life, and wherever you are in Aotearoa, we hope you’re staying safe in your bubbles. Recent weeks have seen lots going on in the electricity industry, from high power prices, blackouts (check out our Facebook page for some media commentary on this) and a drop in demand for power since Alert Level 4. It’s interesting stuff - let’s delve a little deeper.

Overall demand drops

Following last week’s swift move to Alert Level 4 - and similar to 2020’s nationwide lockdown - we’ve seen some big changes in power use for Kiwi consumers. Last Wednesday, the first day of lockdown, Aotearoa’s collective demand for power dropped 21% compared with the previous day, but that margin had lessened to 5% by midday. Since then, our overall decline in demand has plateaued at around 15%, compared with this time last year.

Industry stops

Why the drop in demand? Again, as with lockdown 2020, the biggest factor appears to be the slowing and shutting down of a number of large industrial manufacturing businesses, like NZ Steel (which is only operating at a ‘care and maintenance’ capacity) and a number of paper and pulp mills.

Kiwis at home

As we all know, Alert Level 4 also means the closure of non-essential businesses like bars, restaurants and cafes that would otherwise be running air conditioning, lighting and other sources of power. That’s also having an impact on our demand, with data from Transpower showing demand is sitting lower than standard weekdays. But with lots of us at home (the heater cranking, lights on, and the oven churning out lockdown loaf and homemade pizza), we’re using more power than a standard weekend day. And apparently we all like a good sleep-in - there’s a noticeable shift in the morning peak times (usually around 8:00 am), which have jumped out to between 9-10am. In the evenings, Transpower’s data shows our peak periods are fairly normal, occuring at around 6.30pm each day.

Spot prices drop

The overall drop in demand, naturally, has gone hand-in-hand with a drop in spot prices - for the week ending 17 August, spot prices averaged 12.9 c/kWh, and that dropped to an average of 6.3 c/kWh for the week ending 24 August. Nice!

However, this comes after many months of record high spot pricing (between 1 February and 17 August spot prices have averaged a hefty 25.3 cents c/kWh) and while this is a brief respite for Flicksters already on our Wholesale pricing plan, unfortunately we’re not confident that these prices will stick around for long. In our view, the wholesale market is proving just how volatile and unstable it is (remember, prices spiked over 1000 c/kWh during the blackout on Monday 9 August). We want to protect Flicksters from such high prices and have actively been reaching out to our Wholesale customers to help them make the switch to other plans (if they want), and that’s the main reason why we’ve decided to keep Wholesale unavailable as a pricing plan for the meantime.

Bigger bills in lockdown?

For lots of Kiwis, there’s likely to be an increase in usage during lockdown, and it’s possible that might mean bigger power bills for some households. We know that the uncertainty of the last year, as well as the reduced income and loss of livelihoods that have come with Covid, mean that many households are already struggling to make ends meet, and that’s compounded even more by the current high power prices. Remember, if you’re worried about paying your power bill, don’t hesitate to get in touch.

Hydro’s looking good

It’s two big thumbs up in the world of hydro power - after months of low hydro lakes, we’re stoked to see hydro storage back at healthy levels, with national hydro storage increasing to 109% of average (69% of full) over the last week. That’s mainly down to above-average inflows in the South Island where storage has lifted to 114% of average, while in the North Island storage is sitting at 72% of average.

HVDC update

There’s been trouble aplenty with the HVDC cable that bridges the Cook Strait and moves power between the North and South Islands. The cable consists of 3 poles, and there’ve been ongoing issues with Pole 2 thanks to things like salt spray contaminations, a broken tower arm and fallen conductor in the southern high country, and now, bad weather preventing staff from carrying out repairs. That means it’s been operating at reduced capacity or not at all, and less power has been able to be transferred north. Because of that there’s been noticeable price separation (differences in spot prices) between the islands - from 17 August until 23 August, North Island prices averaged 10.7 c/kWh, while South Island prices averaged 4.6 c/kWh.

Meridian’s spilling

Lots of you will remember our joint claim (or UTS) from 2019 when water was unnecessarily spilled from hydro stations in the South Island and prices were pushed up on the wholesale market. Well, fantastic news - the Electricity Authority (EA) has made the call to reset spot prices on the wholesale market for the trading periods impacted between 3 - 27 December 2019. Prices from that period (at particular hydro stations) will be capped at 1.37 c/kWh - while we’re yet to determine exactly what that means for our Wholesale customers, it’s a big win for Kiwi consumers!

The blackout

We’ve also joined Electric Kiwi, Vocus and Haast Energy Trading in making a joint formal complaint surrounding the blackout on Monday 9 August and the subsequent high prices that followed, spiking to over 1000 c/kWh. We believe the current market design allowed two generators to withhold capacity, despite being warned that there was a shortage of electricity on that day. We’re concerned that this will unfairly impact our customers and set a precedent for pricing that doesn’t reflect true supply and demand, so as part of our complaint we’re pushing the EA to revise these power prices. Want to help us in the fight for a fairer market? Well, you can, Flickster - sign our petition!

As you can see, there’s lots on the go! If you’ve got any questions, drop us a line at Stay safe in your bubble, and we’ll see you on the other side!