Power pricing confusion hitting low-income families in the pocket
Thursday, 29 August 2019
Low-income families are having their power bills halved by a new initiative aiming to reduce 'energy poverty'.
Christchurch Anglican Care missioner Roger Sutton, former chief executive of electricity lines company Orion, recently launched a project where a team goes house to house, helping residents reduce their energy bills.
Analysis by the review panel found electricity consumers in the most deprived areas pay around $79 a year more on average than those in the least deprived areas – after adjusting for differences such as usage levels.
Sutton said many were forking out hundreds of dollars more in electricity bills than necessary.
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'Pretty much every single customer, we can save them $200 to $300 by changing to a retailer that has lower prices.'
Complex electricity pricing plans made it difficult for some customers to shop around for a better deal, he said.
In some cases, where houses were not weather-tight or lacked insulation, heating costs could sky-rocket.
People with a poor credit rating may not be accepted by some companies and were unable to benefit from competition in the industry, Sutton said.
Ghulam Ameri and his family arrived in Christchurch four months ago after spending five years in an Indonesian refugee camp.
While incredibly thankful for their new home, the family were shocked at the first electricity bill of $300.
'We didn't know if that was normal,' Ameri said.
After some help from Sutton's team and Community Energy Action, the bill dropped to $142.
Changes included installation of energy efficient light bulbs, decreasing the temperature of a heat pump, asking Housing New Zealand to fix some gaps in windows, and putting up additional thermal curtains.
The biggest change was to the pricing plan – from a flat all-day price, to one with higher charges during the day and less at night.
Sutton advised the family to turn their large hot water cylinder off during the day, when the charges were higher, and switch it on at night.
Ameri, who has been unable to find work as a camera man and is studying English, said he found it difficult to understand the information on the power company's website.
In another case, a grandmother caring for five children was forced to use food parcels after receiving a monthly bill for more than $800.
Sutton was shocked to discover she was on a pricing plan with higher prices in winter and lower prices in summer – a regime he was surprised was still being used.
He called her power company and they switched her plan to a flat price across the year. Sutton expected this to reduce her bill by about $200.
Electricity retailers did not appear to be offering lower income customers help to find the most cost-effective deal, Sutton said.
'We're yet to find anyone where retailers have proactively done what we have done.'
The final report of an independent review of electricity prices and the Government's response is due to be released in the next few weeks.
Electricity Retailers Association chief executive Cameron Burrows acknowledged the complexity of electricity pricing plans but said power companies had helped fund Consumer NZ's Powerswitch (www.powerswitch.org.nz), which helped compare plans.
Sutton said even Powerswitch was complicated for a lot of customers.
'I'm yet to meet a low-income customer who has actually been on Powerswitch.'