What will cold snap mean for your power bill?

A record-breaking cold snap has New Zealanders cranking up their heaters, potentially leading to higher power bills. Gareth Gretton, a lead adviser at the Energy Efficiency and Conservation Authority, estimates that normal heating could add around $150 to a monthly power bill for households relying on electric heaters – a significant increase from the typical difference between August (the coldest month) and February (one of the warmest).

A cold snap, defined as temperatures at least 5°C lower than normal, would add another 50% to heating costs, potentially costing households an extra $15 or $20 per week.

While heating costs are primarily influenced by the amount of electricity used, the relationship between usage and bills is not strictly proportional. Fixed charges, such as transmission, local lines, and metering costs, account for about 35% to 40% of a household's power bill and remain constant regardless of consumption.

Additionally, households with solar panels may generate less electricity during winter due to shorter daylight hours. For those on time-of-use plans, heating during peak periods (morning and evening) can lead to higher electricity costs. Households with occupants present throughout the day, such as those working from home or caring for young children, are likely to experience more substantial winter bill increases.

Post-pay billing plans mean that higher usage during the colder months may not be reflected in the upcoming bill until it's already been sent. While recent demand has driven up wholesale electricity prices, most households are insulated from short-term fluctuations, as retailers manage this risk through hedging and long-term purchases. Although sustained high wholesale prices would eventually affect retail prices, the recent spikes are temporary and unlikely to significantly impact longer-term electricity price trends.