Electricity users on low-usage plans told their daily fixed charges are doubling

Friday, 25 February 2022

The move to phase out low-user power tariffs was made in September but new pricing has come as a shock to some consumers.

Power companies have started advising customers that the fixed daily charge on their power bills is doubling from 34.5 cents a day to 69c from April.

The country’s largest power company, Meridian, and Nova Energy are among those that have begun sending out new pricing to customers.

The doubling of the daily charge stems from a decision by Energy Minister Megan Woods in September to phase out the requirement for power companies to offer low-user tariffs, over five years from April.

Lower-user tariffs were originally introduced in 2004 as a way of encouraging people to conserve power.

* Low-user electricity tariffs will be phased out over 5 years

* Prompt payment discounts still around despite Government wish to see them gone

The price of gas is expected to rise much faster than inflation over the next four years, in part due to a regulatory ruling.

But the Government, with the enthusiastic support of power companies, concluded they resulted in a price structure that was unfair to the likes of large families who might be living in poorly-insulated homes.

Power companies will be able to raise the daily charge by a further 34.5c a day, including GST next year, and again in 2024 and 2025, allowing them to levy several hundred million dollars a year more in fixed charges.

Woods’ expectation has been that power companies would use the extra revenues to apply an equivalent reduction in charges paid by households that use more power, meaning consumers overall would be no better or worse off on average as a result of the change despite there being winners and losers.

However, the Government did not seek a guarantee from power companies that tariff changes would cancel out on aggregate.

One Meridian price change notice seen by Stuff showed the company was doubling the daily charge for that customer while also increasing Meridian’s own per-kilowatt energy charge by just over 1 per cent.

Meridian spokeswoman Rheilli Uluilelata said it had “put through a small increase to the energy charge to reflect the increased costs of supplying electricity”.

But Uluilelata said Meridian expected the overall impact of price changes from the Government’s decision on low-fixed charge tariffs to be “broadly neutral”.

Earlier this month it emerged that consumers separately face a 19.3 per cent rise in the price of piped natural gas that would be phased in over four years from October, assuming a draft ruling issued by the Commerce Commission is confirmed.

That price rise is solely down to a proposed increase in gas distribution costs and does not include any price increases that may come about as a result of rises in the price of gas itself.