Electricity industry should be paying customers for power sacrifices

The electricity industry should be paying Kiwi families for keeping the lights on instead of boosting profits for fossil fuel generation, Octopus Energy Chief Operating Officer Margaret Cooney said today.

Households and businesses have been asked to limit their power usage on Friday morning between 7 am and 9 am to avoid blackouts, as result of less wind generation and low temperatures.

In the UK, the regulator has established a mechanism where the market compensates consumers for reducing their usage when demand exceed the expected electricity generation available. The 500,000 customers making small savings each can deliver the equivalent benefit to the market as about 3 of Todd Energy’s gas peaking generation plants.

Octopus Energy customers have received over 1 million pounds for lowering their power consumption at peak times thanks to the electricity retailers’ “saving sessions”, lowering demand, helping ensure security of supply through the energy crisis, and decreasing reliance on fossil fuels.

“The retail market has a crucial role to play in managing demand to keep the lights on, but the tools have to be more sophisticated than emails to families asking them to turn down their heaters because it’s too cold,” Ms Cooney said. “The current regulations favour the big four gentailers, deterring investment from new players in both retail and generation. This keeps the market on the brink, shuts out technological innovation, and keeps prices high.”

The investigation into the 9 August 2021 blackout that impacted 35,000 households highlighted concerns about the level of complacency in the sector and the importance of adopting new technology and managing consumer usage more effectively.

“As more renewable electricity comes on line, like wind, it will be increasingly important to manage demand through technology and innovative solutions. But our regulatory settings favour the status quo, and give no incentive to innovate.”

“Whenever demand is high or supply is constrained, the price of electricity from New Zealand’s big four generators goes up. On Friday if we get into a scarcity pricing situation the spot price will be $10,000 MW/hr or more. Rather than just paying that money to polluting fossil fuel generation, we could pay the same to customers for sacrificing their hot showers and toast and reducing demand. It works for the Brits, and I’m sure Kiwi customers would appreciate it too.”


Margaret Cooney

022 044 1186

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