What’s the deal with ‘free money’ from power companies?

By Susan Edmunds of RNZ

From time to time throughout the year, you might hear about people in a certain part of the country getting a discount on their power bills – or a credit in their bank accounts.

Here’s how that works, and why some people miss out.

Community and consumer trusts often own shares in their local lines company. Wellington Electricity and Powerco are notable exceptions.

Each year, the lines company may pay a dividend to shareholders, or the trust may have its own accumulated funds, and this money is paid out to the trust’s beneficiaries – consumers of power using the network.

For consumers in parts of Auckland, that process is under way at the moment, delivering a $350 power bill credit or bank account payment for people served by Vector in the Entrust area of central, east and south Auckland.

Earlier in the year, Top Energy delivered credits up to $300 on power bills to Far North customers in May via the Top Energy Consumer Trust. Another May payout was for The Lines Company customers in King Country, which was a credit of about $200. In August, Scanpower Customer Trust applied a $350 “power bill discount” in August for Scanpower customers in Northern Tararua.

At the start of the year, the Marlborough Electric Power Trust made its payment in January of $75 to customers’ power bills. Customers served by Electra in Kāpiti and Horowhenua had a credit applied in March.

Mainpower Trust delivers its rebate on each monthly bill to customers in the North Canterbury and Kaikoura regions.

Other lines company areas that deliver discounts, credits and rebates include Nelson Electricity, Network Tasman, Network Waitaki, Northpower, PowerNet, Alpine Energy, Counties Energy, EA Networks and Centralines.

Powerswitch general manager Paul Fuge said community trusts would often allocate a portion of profits to fund local projects, too.

Each year, the lines company may pay a dividend to shareholders. Photo /123RF

So why doesn’t everyone get a credit?

The current system evolved from the power reforms of the 1990s.

In Auckland, for example, Entrust was established in 1993 and took ownership of the area’s former power board’s assets on behalf of consumers.

But not every power board dealt with that process the same way.

In the Waitematā Electric Power Board area, which covered North Shore, West Auckland, Orewa and Whangaparāoa, people were given shares in the power board, which they could sell. It became a public company that was then bought by Vector in 2002.

Fuge said the distribution of the credits and discounts could seem random or unfair.

“Beneficiary status is often determined by geographic boundaries, which are based on the long, often convoluted history of the lines companies and their trusts. As a result, a household in one suburb might receive benefits, while a neighbouring household does not.

“This can feel arbitrary, especially since most people don’t consider their local lines company trust’s history when deciding where to live. Beneficiary status can be gained or lost simply by moving a short distance, which can seem inequitable.

“A striking example of this confusion occurs in Tauranga, where the Tauranga Energy Trust only distributes benefits to Mercury Energy customers who were with the company as of January 28, 2021. This creates a situation where customers who switch retailers or move to the area after that date miss out.”

He said the fact that credits were distributed via power bills in many areas gave some customers the mistaken impression that it had something to do with their electricity retailer.

“While this isn’t true, apart for some Mercury customers in Tauranga, the perception can discourage consumers from switching retailers, thereby reducing competition. Lower competition often leads to higher prices overall.

“The current system of benefit distribution is uneven, with arbitrary winners and losers. While energy trusts remain popular and contribute positively to their communities, the confusion and inequities in how benefits are distributed need to be addressed. It might be time to simplify the system by making all electricity consumers in a lines company’s service area beneficiaries, regardless of historical complexities.”