Electricity Market Update and Introducing UtiliBill
Welcome to our latest edition of Between the Lines, Tenco's publication, highlighting our capability, people, and ideas. In this issue, we’ve gathered the latest insights from the utility sector, along with key updates on our services and essential reminders as we approach the end of the year.
New Zealand Electricity - Market Update
The electricity market in New Zealand is under scrutiny, primarily due to potential political intervention and the perceived market power of large electricity generators and retailers (gentailers). The government has indicated its willingness to intervene if the market fails to deliver affordable prices and reliable supply.
The Electricity Authority (EA), the market regulator, is under pressure to address these issues. The EA acknowledges the need for market reform and is working on a program to enhance competition and ensure a stable electricity supply. The most pressing issue is electricity affordability. High wholesale electricity prices, driven by gas scarcity and fears of dry years, have pushed long-term hedge contracts above sustainable levels, particularly for industries. The following factors contribute to these concerns:
Increased costs for consumers: Rising costs for lines, transmission networks, and energy generation are contributing to increased power bills.
Dependence on unreliable sources: The reliance on Genesis' Huntly power station, with its limited capacity and potential for breakdowns, poses a significant risk of blackouts, especially during periods of low renewable generation.
Fuel shortages: The recent gas shortage highlighted the electricity market's vulnerability to fuel supply constraints, contributing to price volatility and uncertainty.
Climate change impacts: Dry years with low rainfall and reduced hydroelectricity generation exacerbate the reliance on fossil fuels and increase the risk of energy shortages.
The future of the electricity market in New Zealand hinges on striking a balance between ensuring affordable electricity prices for consumers, attracting investment in new generation capacity, and fostering a competitive market that serves the long-term interests of all stakeholders.
Tenco operates an in-house tender desk that can source competitive electricity and gas supply contracts. If you have any energy supply agreements that will expire within the next six months, you should start thinking about contract renewals right away. Brendon Blacklaws, our Tender Desk manager, can examine your company's energy requirements and offer unbiased, specialised advice on your contract.
Default Price-Quality Paths
On 20 November, the Commerce Commission released its final decisions to increase revenue limits for national grid owner Transpower and local lines companies – recognising the significant investment required to maintain and upgrade New Zealand’s electricity network over the coming years.
The Commission has set Transpower's maximum permissible revenue for the next five years at $5.9 billion, representing a 44% increase over the previous five years. The Commission's decision to smooth revenue rises limits annual increases to 16% in each of the first two years and 5% in the subsequent three years.
For local lines companies subject to revenue limits, the Commission has set a maximum permitted revenue of $11.5 billion over five years. This is a 47% increase in real terms over the previous five years. However, revenue smoothing indicates the increases are around 24% on average in the first year, with lesser increases in the following four years.
We anticipate that this will have the following impact on our clients:
Our embedded network clients will experience an increase in annual recurring revenue because the increases apply to all connection types.
This will compound the income challenges presented by increases in time-of-use energy pricing for our customer network clients. It will be critical to ensure that internal rates for users on these networks are regularly reviewed.
Over the next five years, your Opex electricity costs will increase.
Tenco is here to support and guide our clients through these changes, and we will work with you proactively when they are implemented; if you have any questions in the interim, please do not hesitate to contact us. For more information on how these decisions will impact consumer electricity bills, visit the link below.
Consumer Care Guidelines
The Consumer Care Guidelines are intended to help New Zealand's power providers provide a uniform and supportive standard of service to their customers. They address various topics, including client sign-up processes, support when consumers are having problems paying their bills, efforts to protect medically dependent customers, and other consumer-related issues.
The Consumer Care Guidelines will soon evolve into Consumer Care Obligations. The two key protections—prohibiting retailers from disconnecting customers they know to be medically dependent and requiring reasonable fees or charges—will apply from 1 January 2025. The remaining obligations will take effect from 1 April 2025 to ensure retailers have the necessary operational changes in place to implement the new requirements for their customers.
This change notably impacts Tenco and its clients operating Residential Electricity Customer Networks. Stay tuned for further updates on these essential developments and for a more detailed outline of the upcoming changes to consumer protections, click on the link below.
Introducing UtiliBill
Tenco launched UtiliBill as the consumer-facing brand for invoicing services undertaken by Tenco on behalf of its clients on 1st November 2024. Tenco can now provide your property's patrons with a more user-friendly and consumer-oriented website, a dedicated brand, and a greater level of service.
UtiliBill is a brand of Tenco that consumers will see starting this month. This change does not require any commercial changes with Tenco. As a client, you will continue to see the Tenco brand, which is focused on our business-to-business relationships.
Learn More About UtiliBill here
Tenco Sustainability Policy
At Tenco, sustainability is at the heart of what we do. This year, we have worked with Toitu to measure and verify our greenhouse gas (GHG) emissions, adhering to ISO 14064-1: 2018 standards. Our policy is designed to minimise environmental impact while optimising the value of your assets, with a long-term goal of supporting our clients through their sustainability journeys. We have just updated our sustainability policy and would love you to have a read.
Stay Informed, Stay Updated
At Tenco, we understand how vital communication is in managing your property efficiently. That's why we believe in always keeping you in the loop. Sometimes, your local network company may need to schedule power outages for necessary maintenance and repairs, ensuring you continue to receive the best service.
We will promptly inform you about these planned outages as soon as we receive a notification. We understand that your tenants depend on you for such updates. Please note that they will not receive any separate notifications regarding these scheduled outages from their electricity retailer.
So, it's up to you to pass on this crucial information to your tenants. With Tenco on your side, you'll always stay one step ahead. Because here at Tenco, we believe in keeping things transparent and seamless, just the way you like it. For additional information on outages and faults, click below.
Tenco Services
Tenco is New Zealand's largest private utility network provider, serving over 200 clients across 350+ networks and leveraging two decades of technical expertise. We have invested in world-class technology and people, so you do not have to.
Tenco also provides billing solutions for water, gas, and fibre broadband, as well as an in-house tender desk that can source competitive electricity and gas supply contracts. We are well-positioned to provide a wide range of utility-related services that will increase the value of your asset. If you have any energy supply agreements that will expire within the next six months, you should start thinking about contract renewals right away. Brendon Blacklaws, our Tender Desk manager, can examine your company's energy requirements and offer unbiased, specialised advice on your contract.
Stay Connected
To keep up with all our latest information and updates, please visit our website at tenco-ebs.co.nz. If you have any inquiries, don't hesitate to reach out to us directly at info@tenco-ebs.co.nz. Alternatively, you can contact us by phone at 0800 359 500.
