Children in homes with prepaid power meters risk developing bronchial illnesses because many families run out of cash to keep the meters topped up, experts say.
A survey of 324 households on pre-paid meters by Otago University public health researchers has found that 58 per cent of the households with children allowed their power to go off at least once in the past year because they could not afford to top up the meters.
Almost three-quarters (70.5 per cent) said they shivered inside the house at least once last winter as a result.
Papakura solo dad Abraham Tangiwai, a father of 12 who has six children living with him, said his two youngest children Doris, 8, and Troy, 4, had more colds each winter since the family went on to Mercury Energy's Glo-bug pre-paid meter system after receiving a shock $900 power bill four years ago.
"We run out of power just about every week," he said.
"Sometimes we spend a whole day or two days without power if it cuts out on a Friday or Saturday because you have to pay $5 to reconnect at the weekend."
He said the family never used heaters even when the power was on to save costs, and he usually cooked outside on the barbecue rather than use electricity. The children "find it hard".
"Doris has had four colds this winter. She's been off school for three or four days, sometimes all week," he said. "She doesn't like being outside in the winter having a feed."
An older daughter, aged 16, has had rheumatic fever.
Otago researcher Professor Philippa Howden-Chapman said cold, damp, overcrowded houses were largely responsible for New Zealand's third-world rates of rheumatic fever and other childhood infectious diseases.
She said the pre-paid meters could be part of the solution if they offered cheaper power, but a Consumer NZ survey in May found that they actually cost typical households between 3 and 38 per cent more than traditional monthly billing.
Mercury's Glo-bug system cost 6.2 per cent more than monthly billing because Glo-bug customers pay the full standard rates for power and can't get a discount for prompt payment.
They also pay 65c every time they top up their credit at local shops plus 50c to text the company to say they have topped up if they need to be reconnected.
Mr Tangiwai does not have a landline or cellphone and has to use a neighbour's phone to notify Mercury when he has topped up after a disconnection.
Mercury has 17,000 customers on its Glo-bug system in Auckland and has recently agreed to take over 7000 pre-pay customers in Christchurch from Meridian Energy.
Altogether there were 52,664 pre-pay meters in New Zealand at last count in 2008, or 3 per cent of all households.
The Otago study found that the households using them had a median income of just under $40,000, compared with a national median of $63,237. Just over half (54 per cent) had children.
Despite frequent disconnections, the study found that an overwhelming 76 per cent of pre-pay customers were "satisfied" or "very satisfied" with the pre-pay system because it helped them to manage their power costs.
Mighty River Power, which owns Mercury, said most customers had cut their total electricity costs through the pre-pay system because they were previously paying much more in disconnection and reconnection fees, credit management fees, debt collection agency fees, bank penalties for failed payments and interest on debt.
"Typically, we have found that customers moving to Glo-bug have rarely accessed the prompt payment discount [previously]," said retail general manager James Munro.
Yet 60 per cent of Glo-bug customers actually used more electricity than they had before because they could now manage their payments better.