The power is disconnected for prepay customers more often than for people on contract accounts. Image / RNZ
By Susan Edmunds and Ellen O’Dwyer of RNZ
More than 10,000 households a month have their power disconnected, new data shows.
The Electricity Authority has published a new disconnections for non-payment dashboard, including prepay customers who have been disconnected.
It shows that between January and October, there are an average of 810 disconnections a month for people on contract accounts.
For 44% of them, the disconnections lasted less than one day.
Prepay customers were disconnected more often. There were 27,000 disconnections a month affecting 10,000 prepay customers, or 35%. Prepay customers are automatically disconnected when they run out of credit.
Almost 60% were disconnected more than once but 94% lasted less than one day.
Kate Day, co-director of Common Grace Aotearoa, said the data was helpful to help address the problem.
“We are particularly sobered to see data on prepay disconnections. Prepay is used by roughly 28,000 households and is a last resort for many low-income people with poor credit history who can no longer access standard plans. A reason we believe disconnections on post-pay – standard plans – are not increasing is those having trouble paying are increasingly having to move to prepay. This makes prepay disconnections a crucial part of the picture of energy hardship.”
Day said the figures were grim.
In July, power companies cut off electricity to 12,075 households because of non-payment, including people on contracts and prepay.
“That was an average of 390 households switched off per day. The vast majority of households disconnected were on prepay, and most of those faced two or more disconnections in that month. A full 183 households were disconnected 11 times or more, meaning on average they spent time without power every three days.
“Over the full 10 months of the dataset, companies disconnected households 282,370 times, an average of 28,327 disconnections per month. Each month, an average of 11,000 households faced disconnection.
“While a small minority of these households may genuinely choose to disconnect, for instance, because their property is unattended for a significant period, many households would have disconnected due to lack of funds,” Day said.
“It is positive that the majority of disconnections lasted less than 24 hours and this shows effort from companies to help people reconnect quickly. However, looking at July as an example, there were still 1848 disconnections that lasted between one and seven days. That was an average of 60 disconnections occurring per day in July that would last longer than 24 hours.”
She said that meant many households spent one or more winter nights with no lighting and potentially no cooking or heating.
“These figures show we have a long way to go before everyone can afford the electricity they need. This new data provides a vital baseline, now the Electricity Authority and companies must accelerate work to reduce the numbers of people cut off from the essential service of electricity.”
Jake Lilley, spokesman for the financial mentor network Fincap, said his organisation was concerned about the scale of disconnections for non-payment – at more than a thousand each weekday.
“For comparison, the state of Victoria in Australia, where prepay automatic disconnections are prohibited, has a larger population but recently averaged just over a thousand disconnections a month.
“Energy is an essential service, needed to keep healthy and keep up with the world. It is the front line of our health system, affordable heating and home-cooked meals can prevent presentations to hospitals. The Consumer Care Obligations that set out what electricity business must to do help people offer next to no protection from automatic disconnection when someone runs out of money on prepay power. This needs urgent attention.”
He said some people had no option but to choose prepay power.
“We need a right for all to connect to a post-pay electricity arrangement at a fair price in Aotearoa to prevent serious harm for whānau who otherwise could not maintain ongoing access to the electricity they need.”
Jessica Walker, communications and campaigns manager at Consumer NZ, welcomed the data being made public.
“The rationale given for the previous exclusion of prepay disconnections was an assumption that consumers accept disconnection as part of the prepay product. We, along with other advocates, have strongly disagreed. Many households do not actively choose prepay; they end up on it as a last resort. In many cases, non-payment or a poor credit history result in households being required to go on to a prepay plan in order to get connected. For these households, prepay is not a genuine choice.
“In the absence of official data, Consumer NZ has previously relied on extrapolations from our own ongoing survey work and estimated that there could be around 40,000 disconnections for non-payment each year. Some of the industry disputed this, arguing that we were overstating the scale of the issue. The newly published data shows the opposite: if anything, our estimates were conservative.”
Electricity Retailers and Generators Association chief executive Bridget Abernethy said members were focused on supporting customers who were struggling.
“For those managing multiple bills, prepay can be a helpful way to keep overall household finances in check. Retailers may offer this option when it fits well with a customer’s situation. The number of prepay customers is falling, around a 6% reduction since 2023.
“The data clearly shows that of those who reach the disconnection point, most prepay customers reconnect quickly – over 90% within just 24 hours. Only a small number are disconnected for more than three days at a time.
“A prepay disconnection might be because of hardship, but it could also mean the customer is away, the property is vacant, or it’s for temporary use, like a holiday home. Providers gain these insights in their interactions with customers. The dataset is broad and includes both small businesses and residential properties.
“We welcome the Electricity Authority providing more detailed disconnection information publicly available. Having reliable data is essential for addressing energy hardship effectively. At the same time, it’s vital to look at the new dashboard carefully to help us make informed decisions about where support is best placed.”
Andrew Millar, the Electricity Authority’s general manager of retail and consumer business, said given less than 0.1% of most customers had been disconnected, New Zealand’s consumer obligations were working as intended.
He said it was too soon to tell whether the numbers of prepay disconnections reflected the cost-of-living crisis, as this was the first time the data had been released.
Millar said some people liked prepay because it gave them more control of their electricity use, and some used it for properties or holiday homes that were not always in use. But he said he would not recommend prepay for people who were medically dependent, because their electricity could be cut off.
Disconnections that lasted over several days were concerning, he said, and would be something the authority would be talking with retailers about.
He said the disconnection data would be released monthly – and he hoped that in time it would be able to track if people were moving between postpay and prepay plans.
“This data is about really looking under the hood of the retail market for the first time and giving more visibility. It’s important we have this information out there so ourselves, retailers and other advocates can have a really informed discussion about consumers, their needs and where energy hardship may be.”
– RNZ