It’s pretty simple, really - we’re just passing on the price of what it costs to hedge your generation price for 6-months, depending on which network you’re in.
In the industry, buying power in advance is called hedging. It’s a practice where retailers purchase a specific amount of electricity from a generator at a fixed price, over a long period of time. It's basically like a form of insurance, helping to manage market volatility.
Most retailers here in NZ use the hedge market to purchase electricity, and then sell it to their customers at a set rate. They know the price they’re paying for power in advance, so they can set their fixed-term contracts (or any special offers) accordingly.
The long and short of it? You’re paying us back for power we’ve already bought on your behalf. Sweet!
You can go here and get an estimate of what you might pay.