Almost two years after a review of electricity bills recommended the move, the Government phasing out "low use" electricity plans which led to low-income families subsidising the bills of more efficient households.
On Friday Energy Minister Megan Woods announced that the Government would begin a process to phase out "low-use" plans from April.
Currently, the cost of delivering electricity through lines charges to those on low-use plans is supplemented by other households on standard-use plans.
The 2019 Electricity Price Review panel found the low fixed charge regulations are poorly targeted and are not equitable – or fair to everybody – and recommended the change.
AdvertisementAdvertise with NZME.
The Electricity Retailers Association chief executive Cameron Burrows said the move "will stop many low-income households subsidising the electricity of better-off families".
Typically the plans help smaller households with good insulation and efficient heating.
"While the low fixed charge regulations were intended to help some struggling households, they can put more of a financial burden on those who don't qualify for low fixed charges, particularly larger families and those living in poorly insulated homes who have higher electricity needs and have to pay the much higher standard fixed charge," Woods said in a statement.
The plans will not go quickly, however. The plans will be phased out over five years, starting from April 2022. The changes needed to be well signalled to give the industry time to adjust to the changes.