Inside Tauranga’s electricity market: Why city pays more and many miss out on rebate

The TECT Community Trust was established as the Tauranga Energy Consumer Trust in the 1993 electricity reforms to hold a shareholding in Trustpower for the benefit of Tauranga and Western Bay of Plenty electricity consumers.

A charitable trust was established in 2002.

TECT distributed money directly to eligible local Trustpower customers via a rebate – TECT cheques.

As Trustpower was sold over the past few years, customers who moved their accounts to the new owners (Mercury Energy and Contact Energy) retained their right to the rebate.

Customers of other power companies have never been eligible for the rebate, and neither were new Mercury or Contact customers.

The TECT website said the rebate was $500 a year, split into two payments, usually in July and December.

This would increase to $600 from 2031, then $700 a year from 2041 until 2050, when the rebates would end.

Concerns were raised about the rebate in 2019 during the Ministry of Business, Innovation and Employment’s (MBIE) electricity price review, and again during Mercury’s 2021 acquisition of Trustpower’s retail business.

The review found the TECT rebate reduced competition in Tauranga and suggested the Commerce Commission investigate the issue.

The commission found the trust’s practice of restricting rebate payments to Trustpower customers (now largely with Mercury) “potentially distort[s] retail competition”.

It declined to investigate further.

Tauranga resident David Riley said in his view, the commission let the review down with a “deeply flawed report” on the TECT rebate scheme.

Riley is a Mercury customer, a TECT cheque beneficiary and a long-time advocate for change.

He said TECT’s rebate model left Tauranga with the least competitive electricity market in New Zealand.

MBIE’s latest quarterly survey of domestic electricity prices, released in February, recorded Tauranga’s “energy and other” price as 29.8c per kilowatt hour – higher than any other region.

This reflected the total cost consumers paid for power, excluding the lines charge.

Electricity Authority data showed Mercury’s market share in the region was 50% on March 31, nearly twice its national share of just over 25%.

The data also showed switching rates in Tauranga were the lowest among major centres.

Riley used Consumer NZ’s power plan comparison website Powerswitch to calculate prices at different retailers in Tauranga and Auckland using MBIE’s model for an average residential consumer (8000kw per year).

The average Tauranga Mercury consumer would pay $3945 a year before the TECT rebate, if eligible. Prices charged by other retailers ranged from $3182 to $3988.

A similar consumer in Auckland would pay between $2971 and $3498.

In January, Riley made a submission to the Energy Competition Task Force, established by the Electricity Authority and Commerce Commission to investigate ways to improve the performance of the electricity market for consumers.

“I feel I can challenge TECT because I’m still a beneficiary,” Riley said.

“There’s no sensible reason in the world why I am there [with Mercury] apart from that.”

His submission said community electricity trusts paying rebates to customers of a single retailer (as is the case for TECT) was recognised as a competition risk and “prohibited under part 6A.6″ of the Electricity Industry Participant Code.

The code stated community trusts must ensure rebates do not discriminate between customers of different retailers connected to the network.

Riley said TECT was never recognised as an industry participant because it held shares in a power retailer, rather than a lines company.

He backed the alternative distribution plan suggested by Consumer NZ in its submission to the task force.

Consumer NZ Powerswitch manager Paul Fuge wrote that other New Zealand energy trusts distributed benefits to all households within their geographic areas, and this was a fairer model.

TECT only distributed to a “legacy subset” tied to a specific retailer.

That meant customers in the same neighbourhood with the same retailer could “face markedly different effective electricity costs, purely based on historical eligibility”.

The model had an “unintentional” and “cooling” effect on the market, Fuge said.

Using MBIE’s model for an average consumer, he calculated that the average annual cost for a New Zealand consumer in 2025 was $2863.

Tauranga’s average annual cost was $3124 – 9.1% higher.

He said prices should improve if the rebate distribution method changed.

“Retail competition can flourish because there’s a big chunk of customers who are then free to change retailers.”

Independent power retailer Electric Kiwi has raised concerns about the rebate being a barrier to competition in Tauranga.

Chief executive Huia Burt said it was one of the least competitive regions and consumers were paying higher prices.

“We believe the rebate should be available to all consumers to create strong competition.”

TECT chief executive Wayne Werder said the trust acknowledged the commentary by Consumer NZ and Riley, and accepted the rebate scheme unintentionally reduced retail competition.

“We understand the rationale behind Consumer NZ’s suggestion.

“However, the changes suggested would effectively require existing beneficiaries of the TECT Consumer Trust to give up or dilute their current entitlements in order to redistribute them more broadly across the community.”

He said changes would raise significant legal, fiduciary and fairness issues for TECT trustees.

“The rebate is now a closed, sinking-lid scheme.”

Werder said the rebate’s dampening effect on competition would decline over time because of the restructured eligibility.

About 32,900 consumers received a TECT rebate at the most recent distribution in December 2025, down from almost 48,000 in 2021.

This decline showed that consumers were moving or switching power companies.

Mercury chief customer officer Suraiya Phillimore-Smith said multiple factors determined its electricity pricing.

“These include the cost of generation, distribution, metering, and service elements. Many of these factors differ from location to location.”

She said Mercury did not set or control the TECT rebate scheme.

Electricity Authority general manager for networks and system change Tim Sparks said the task force was established to address competition concerns about broader market setting – not specific problems that are local to a region.

He said investigating these problems was the Commerce Commission’s role.

Commission acting general manager for competition, fair trading, and credit Grant Chamberlain said it made preliminary inquiries in 2020.

It considered whether the TECT rebate substantially lessened competition.

“Although switching rates were low, the number of retailers was consistent with other regions, and the rate of entry was high. Trustpower’s market share was also declining at an increasing rate.”

He said the commission decided to take no further action.

It last visited the rebate scheme in 2021 when it advised on TECT’s restructuring during Mercury’s acquisition.

“The High Court found it was proper and lawful for the trustees to implement the proposed TECT restructure.”

Chamberlain said the rebate scheme and electricity competition issues in Tauranga would not be investigated in 2026.

He encouraged anyone concerned about a potential Commerce Act breach to raise concerns via the commission website.

Bay Financial Mentors general manager Shirley McCombe recommended that consumers worried about power costs use an online comparison site to review electricity providers and plans.

“Based on [consumer-specific] information, the site identifies the most suitable plans for their needs and compares which providers offer the best value.”

Options include the Electricity Authority’s billy.govt.nz and Consumer NZ’s Powerswitch.org.nz.

She said ways to reduce electricity use could include using curtains, adjusting the timing and length of showers, and optimising heat-pump temperatures.

Bijou Johnson is a multimedia journalist based in the Bay of Plenty. A passionate writer and reader, she grew up in Tauranga and developed a love for journalism while exploring various disciplines at university. She holds a Bachelor of Arts in Classical Studies from Massey University.