Electricity Price Review proposes help for struggling households
Tuesday, 19 February 2019
More help could be on the way for New Zealand households struggling to pay their power bills.
The Electricity Price Review has released an options paper, outlining what could be done to address issues identified with New Zealand's power industry.
In September, the review reported that more than 100,000 households spent more than 10 per cent of their income on power bills and residential power prices had shot ahead of what commercial customers paid.
Now, the review group has recommended, among other 'favoured options' that a cross-sector 'energy hardship group' be formed, including government agencies, regulators, industry participants, community organisations and consumer advocates.
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That could be followed by the Government establishing a network of community support services to help people who were suffering energy hardship.
'Such a network would offer timely, cost-effective assistance to thousands of households in energy hardship by building on existing community organisations, including their service delivery methods and community relationships. It would offer advice on things such as switching and power plans, energy use and building the skills of community groups to help deal with energy hardship.'
The review also favoured the option of setting up a fund that households could draw on to act on the advice of those energy-use advisers, to make their homes more efficient.
It also recommended extra financial support for households in energy hardship.
'The Winter Energy Payment has had a positive effect for many households but we expect many are still struggling to pay their power bills – particularly low-income households with very high energy needs.' Not everyone was able to access that payment, the review paper noted.
The group also said retailers should be stopped from offering prompt payment discounts - described by some as late payments in disguise - but would be allowed to charge 'reasonable' late fees.
The September report found a two-tier market was developing between those who shopped around for a better deal on their power bills and those who did not.
The options paper said more should be done to help people compare offers, and to help people who did not bother to look into switching.
At the moment, the Electricity Authority spends $2.5 million a year on Whatsmynumber and supporting Powerswitch.
'That money would be better spent on a single website that was easier to navigate, was better at identifying the best deal for individual consumers and offered real-time access to each customer's usage data.'
It wanted winbacks prohibited. That is the process through which power companies fight to hold on to departing customers with better offers. But it did not favour introducing power price caps.
Changes were recommended for the wholesale power market, too.
There has been concern that 'gentailers' that generate and retail power have too much power in the market.
The Electricity Price Review recommended introducing market-making obligations on vertically integrated companies to ensure they quoted buy and sell prices for certain benchmark contracts and price spreads were within a maximum range.
They should also be required to release information about the profitability of their retailing activities, the review said, and the Electricity Authority should periodically compare wholesale contract prices with new generation costs for evidence of excessive profits.
Submissions close on March 22.