Local electricity company Trustpower is one of several energy providers to have made submissions on the draft terms of reference for a government review into retail power prices.

Energy and Resources Minister Megan Woods released the final terms of reference for the review earlier this week.

She says New Zealanders deserve to have access to electricity at a fair price, and this review will look into whether the electricity market is delivering that.

'Residential electricity prices have risen by around 50 per cent since 2000 but the price for business remained flat. We want to find out why that is,” she says.

The review will adopt a forward-looking approach and will consider the entire electricity market, from generation, through transmission and distribution, to retail.

'We need to consider how the market operates as whole because all of it contributes to what makes up our power bills.

'The review is also tasked with looking at how the electricity market and its regulatory framework is placed for the future, especially in the light of the rise of emerging technologies such as solar power and electric vehicles.”

The minister says an expert advisory group will provide peer and technical advice for the review, which will be supported by a secretariat provided by the Ministry of Business, Innovation and Employment and external consultants.

'The review will be carried out in stages, with the first phase looking at determining facts and building evidence,” says Megan. 'The scope of further stages will be shaped by those findings.”

Trustpower was one of several submitters on the draft terms of reference, along with other large electricity companies such as Genesis, Mercury, and Meridian.

In their submission they say they ‘are confident the underlying structure of the market is sound, and that the market is performing well'.

However, the company questions whether the period from 1999-2017 is an ‘appropriate timeframe' for the review, citing significant differences in the market and regulatory structure across both generation and retail between now and then.

Although that period will remain a focus for the review, looking to the future will also be given equal weight – something Trustpower called for in its submission.

A spokesperson for the minister says the impact of people going ‘off the grid' in the future with their own personal generation (such as solar power) will likely have an impact on prices, and affect the poorest in our communities, who are the least likely to be able to generate their own electricity.

Trustpower also points out that current ambition to have 100 per cent of electricity generated renewably by 2035 will put pressure on prices.

'Renewables are relatively cheap to operate but expensive to develop (i.e. they have low operating costs but high capital costs), and the investment costs required to meet these targets will have to be recovered somehow.

'While we support an increased role for renewables, the extra investment required will place upward pressure on electricity prices (assuming the increased investment costs will be recovered via the electricity market).”

Earlier this year, TECT trustees made the proposal to wind up the consumer trust and focus solely on their charitable operations.

Speaking to SunLive at the time, TECT chair Bill Holland says there is perennial uncertainty in the electricity sector due to the risk of government interference.

'Two years after I came onto the board, our shares were worth around eight dollars. Then Labour and the Greens came out with a policy [NZ Power, which would have purchased all electricity generation for the country] and the price dropped to six dollars. Now, they didn't get in at that election, but it shows what can happen.

'Power prices are very political – just last year we had someone from New Zealand First saying the government should be buying back the electricity companies.”

This upcoming review was one of the reasons behind re-examining the future of TECT. However, the trustees' proposal failed to make it to a vote after submissions from consumers were overwhelmingly against change.

The current review will begin gathering evidence in April of this year, and is expected to report back its findings and recommendations by April/May 2019.