New Zealand's average power bill at lowest level in 11 years

Friday, 19 June 2020

The way people will pay for the transmission of their electricity from now on is being revealed later today.

Power bills are the lowest they've been since 2009, new data shows – but a lot of that is due to New Zealanders using less.

Data from the Ministry of Business, Innovation and Employment (MBIE) released on Friday shows the average New Zealand annual power bill has reached an 11-year low.

The average household paid $2067 in the year to March 2020, down $156 compared to five years ago, when adjusted for inflation.

At the same time, annual average consumption dropped from 7279kWh per household in 2015 to 7099kWh in 2020. It is down from a high of 8151kWh in 2005.

The cost per kilowatt hour fell 1.8 per cent in the year to March compared to the same time a year earlier.

* No plans for power discounts from big energy companies during lockdown

* Consumer poll puts electricity industry in poor light

Electricity Retailers Association chief executive Cameron Burrows said the fall was driven by increased competition. There were now 30 power companies operating, making it the most competitive market ever.

Flick Electric scored the highest customer satisfaction rating in Consumer NZs survey.

The 2020 average annual bill was lower than in 2017 and 2018, when average consumption was lower.

Improvements in the quality of housing and heating efficiency had also led to savings, he said.

“New Zealand has the 10th cheapest electricity in the OECD, and it comes to Kiwis in a way that’s highly renewable, very reliable, and with a great amount of choice.

“Increasingly we’re seeing price isn’t the only thing that matters. Consumers care about non-price factors like plans that bundle in other utilities, offer smoothed monthly payments to avoid winter bill peaks, and different billing schedules to suit a customer’s circumstances,” Burrows said.

Despite this, consumers were still struggling to pay bills, a Consumer NZ survey released this week showed.

Trustpower and Contact Energy fared the worst in a Consumer NZ survey released this week, showing customer satisfaction scores of 43 per cent and 45 per cent respectively.

One third of households surveyed said power costs were a big worry and 17 per cent had trouble paying.

Customers of prepaid service Globug fared the worst, with 45 per cent of customers saying they struggled to pay. Half said they borrowed money from friends or family, or sought assistance from Work and Income NZ.

Fifty-one per cent of Globug customers had had their power cut off when payments weren't met.

The survey also outlined levels of customer satisfaction between power companies. Customers of three small brands were the happiest with the service.

Flick Electric, Nova Energy and Electric Kiwi all had high satisfaction scores of 76 per cent, 74 per cent and 71 percent, respectively.

Jon Duffy, Consumer NZ chief executive, says late payment fees are often disguised as prompt payment discounts.

The worst ratings went to Trustpower and Contact Energy, with customer satisfaction scores of 43 per cent and 45 per cent respectively.

Consumer chief executive Jon Duffy said Trustpower's rating was “significantly lower than the industry average of 52 per cent”.

“It's the worst score any of the big five power companies have earned in our past three surveys,” he said.

Trustpower general manager operations Fiona Smith said the results were disappointing.

The Government said the Electricity Price Review would benefit consumers but, a year on, doubts remain that all power companies have adopted the spirit of its recommendations.

Independently conducted customer surveys had “consistently rated their satisfaction at 80 per cent”, prior to Covid-19.

But the surveys were only of the 20 per cent of customers who interacted with Trustpower via phone and webchat. Customers that managed their own accounts digitally and didn't need to speak to a team member had customer satisfaction ratings of over 85 per cent, Smith said.

Contact Energy spokeswoman Leah Chamberlain-Gunn said the company has asked Consumer for the related feedback so it could better understand how it could improve the service.

“We're obviously disappointed with the results. Our team … work hard to look after our customers, but we know there is always room for improvement,” she said.

Consumer also found 12 per cent of all respondents said they had overdue fees added to their bill.

Late payment fees were often disguised as prompt payment discounts, which acted as penalties for people who didn't pay on time, Duffy said.

“Trustpower has a 15 per cent penalty if you miss paying by the due date. That’s more than you could be charged by payday lenders, which have interest and fees capped at 0.8 per cent a day,” he said.

Smith said Trustpower was mindful of the hardship brought about by Covid-19 and had stopped disconnections pre-lockdown. It hadn't applied disconnection or late fees since then, as long as customers contacted them and agreed to a payment plan.

Prompt payment discounts were criticised in a 2019 report from the Government appointed Electricity Price Review, which recommended they should be banned. It also recommended only reasonable late payment fees should be allowed.

However, of the five big energy retailers, four were still using them. Only Meridian Energy had removed them entirely.

Smith said Trustpower was still considering the permanent removal of the prompt payment discount and would be making an announcement in the coming weeks. Due to the financial pressures Covid-19 had placed on people it was giving customers an extra week to pay.

The price review panel also found that energy retailers could be earning extra revenue to the tune of $39 million because customers were on the wrong plan.