Consumer protections in electricity market long overdue

3 October 2019

Protections for vulnerable electricity consumers and an end to misleading “prompt-payment discounts” are being welcomed by Consumer NZ.

The changes, announced by the government today, are in response to the Electricity Price Review panel’s recommendations.

Consumer NZ head of research Jessica Wilson said rising power prices had left many households struggling and protections were long overdue.

Mandatory minimum standards to protect vulnerable consumers have been flagged as a priority, a change Consumer NZ has been calling for.

Electricity companies have also been put on notice that they need to get rid of prompt-payment discounts.

“These discounts are effectively a late-payment fee in disguise and penalise consumers who can least afford it. If companies don’t remove the discounts, which are costing consumers an estimated $45 million, they now face legislation forcing them to do so,” she said.

Other wins included the establishment of a consumer advisory council, a move Ms Wilson said would go a long way to ensuring the consumer voice was heard. The council would advocate on behalf of residential consumers and small businesses.

“Successive reforms of the electricity industry have failed to ensure consumers are represented in decision-making, despite the huge impacts these reforms have had on households. We’re optimistic the consumer council will change that, providing it’s got the resources to do the job,” Ms Wilson said.

Consumer NZ also welcomed changes to give the Electricity Authority a specific consumer protection obligation, and requirements for the big power companies to disclose information about the profitability of their retail arms.

“Despite electricity demand falling, prices continue to rise and are up 1.4% in the past year. Much greater scrutiny is needed of the big retailers to ensure they’re playing fair,” Ms Wilson said.

In the year to March 2019, there were 33,106 disconnections for unpaid bills, up from 19,180 in 2016.

Consumer NZ’s latest electricity survey also found:
18% of consumers had experienced difficulty paying their bill
10% had overdue fees added to their bill
9% borrowed from family or friends to pay the bill
5% took out a loan to pay the bill.
Changes to make it easier for consumers to compare power prices have also been announced. They include merging the Electricity Authority’s whatsmynumber.org.nz and Consumer NZ’s powerswitch.org.nz sites. Ms Wilson said a single, independent price-comparison website would be the best option for consumers.

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