For further investment in the national grid, everyone will have to pay more. Photo / The Spinoff
Originally published by The Spinoff.
Power bills will increase an average of $10 per household per month from April 1. What do these changes mean for people who are already struggling?
Your power bill will be rising by about $120 over the coming year, with increases continuing annually until 2030 (by when the year-on-year rise will have reduced to about $60).
That’s a lot, especially when power is already expensive.
It’s all because last year, the Commerce Commission agreed to increase revenue limits for Transpower, the national grid company, as well as local lines companies (like Vector in Auckland). The money will be used to invest in the national grid, covering increases in material and labour costs, and higher interest rates.
The price rises will differ depending on where you live and the network provider you are with. OtagoNet will have a $20-per-month increase; and Alpine Energy (Timaru), Top Energy (Kerikeri) and The Lines Company (Te Kūiti) will have a $25-per-month increase for the first year.
Most customers will have received a letter or other communication from their power company breaking down the changes.
Additionally, April 1 will see an increase to the maximum “low fixed charge”, a type of power plan where households that use less than 8000 kWh of electricity a year (or 9000 kWh in the South Island) get a discounted power rate. This can apply to households with another source of energy or fuel (solar power, gas, a wood fire as a heater), few residents, or small or well-insulated houses.
An Electricity Price Review conducted by the Ministry of Business, Innovation and Employment in 2019 found that these low-use charges were unfair, confusing, and could encourage people to under-heat their homes.
Essentially, how much power you use is not a good indicator of economic disadvantage: a large family living in poor-quality, badly insulated housing might be experiencing economic hardship, but would be using more electricity, not less.
Often, households experiencing economic hardship were subsidising people in better-quality houses, or with fewer people living in them.
In 2021, the Government agreed to phase out the low-use regulations over five years. But every year since 2022 the maximum low fixed charge has increased by 30 cents a day.
In response, a group of power companies pooled $5 million together for a power credits scheme, where people on low-use electricity plans can receive one or two $110 credits if they are finding it hard to pay their power bill.
While the current price rises are not under the electricity companies’ control, these corporations have been very successful since the electricity companies were privatised in 1999.
Contact, Genesis, Mercury, and Meridian are staples on the New Zealand Stock Exchange. Contact had a profit of $142.4m in the six months to December 2024 and Genesis had $70.3m.
Low hydropower flows meant Meridian had a loss of $121m and Mercury had a loss of $67m over the same period. All power companies made more than a billion dollars of revenue over that same time.
Kate Day, an advocate with the Everyone Connected campaign, says that people hit by both low-use tariff increases and the general price rises will be most affected by the April 1 changes.
“On top of all the other rising costs, it’s a perfect storm of lots of increased prices at once as we head towards winter,” she says.
Independent power plan comparison tool Powerswitch has also seen nearly twice as many people as usual checking if they can get a better deal, as customers have received notices about price increases – an unusual situation for summer, says manager Paul Fuge.
“We know that about 18% of people struggle to pay their power bill – if prices go up by even 2%, there are even more people in that bucket,” he says.
There isn’t consistent data on how many people have their power disconnected due to financial hardship each year, but Consumer NZ estimated in 2024 that 40,000 houses had been cut off as a result of not being able to pay their power bills.
A report from MBIE in 2022 found that 6% of households couldn’t keep their home appropriately warm because of electricity prices.
Day points out that most information on power disconnections doesn’t include people on pre-pay power plans, another vulnerable group that will also be impacted by price rises.
People are often placed on pre-pay plans when poor credit history means that power companies won’t take them on as a standard customer. The plan pays for a certain amount of electricity; if that amount of electricity is used before the account is topped up, power will turn off.
Power companies have various support in place for customers struggling to afford bills.
The big four companies – Meridian, Genesis, Mercury and Contact – distributed more than 11,145 power credits in 2024, a total of $1.2m for customers in need.
Mercury has frozen prices for customers in hardship, preventing the April 1 price increases from affecting their bills, and offers support like bill credits and tailored payment solutions.
Craig Neustroski, the customer chief operating officer at Mercury, said that as a result of these various schemes, no customers have had their power disconnected as a result of not paying a bill since June 2024.
Genesis has a range of support for customers in need, including giving away curtains and efficient LED bulbs, proactively contacting people with unusually high bills, and offering a “fresh start” to customers who have struggled to pay bills and are at risk of disconnection with free power services, more time to pay, and contact with budgeting services and WINZ.
Contact provides “energy wellbeing credits” to customers in need and does not charge disconnection and reconnection fees for customers who have had their power cut off due to non-payment.
Meridian, whose customers will see an average increase of $18 a month (80% of which is the transmission and lines changes), has an energy wellbeing programme that helps make it easier for customers to heat their homes, which can include providing curtains, insulation and heat pumps.
Astrid* is unable to work for medical reasons. She found out about the power credits scheme from an article in Consumer, and realised that she qualified, as she has been on the same electricity plan for a number of years (combined with gas, meaning she didn’t use much electricity).
She hadn’t missed any power payments yet, and had recently withdrawn her KiwiSaver for financial hardship reasons.
With power prices rising, she contacted her power company. “I spent at least an hour and a half on the phone,” she says. Having worked in call centres herself, she knew to keep advocating for herself, and to ask for her call to be escalated.
“The person on the phone had no way to help me, they had to escalate to their supervisor, then someone had to go through the transcript from my previous call,” Astrid says.
Despite her request, a note about her financial circumstances hadn’t been added to her file, so she had to explain everything again. In the end, though, she was happy with her experience.
She was offered an additional 20% discount on her electricity for three months in recognition of her financial circumstances. “I’d advise others to only ring at a time when you are able to sit there for an hour and a half. That would be really hard if you have young kids,” she says.
The Everyone Connected campaign has four requests for all power companies in an open letter – although Day points out that some are already taking these steps.
They’re being asked to proactively check customers are on the right plan for their power usage; to stop charging disconnection and reconnection fees when power has been disconnected due to a bill not being paid; to ensure that prepay plans are the same cost per KWh as post-pay plans; and to serve all customers regardless of credit history.
Consumer NZ, FinCap, the Child Poverty Action Group and the Citizens Advice Bureau are among the organisations that have co-signed the open letter. Fuge, the manager of Powerswitch (operated by Consumer), says that providing electricity is a vital service, meaning that private companies have to look after their customers.
“Expensive power can have big societal effects. Kids can’t do their homework, they get cold, there’s more sickness in families, there’s more absenteeism from school,” he says.
“People might underheat their home or turn their hot water off – and then there are knock-on effects in the health system.”
While the retailers’ support for customers is important, he describes it as “sort of piecemeal – there is no nationwide approach”.
That makes it all the more important to ensure that people can access what they need, affordably, even though the admin required to switch plans often makes it low on people’s priority list.
“Power is a begrudged purchase, people aren’t excited about it – you don’t get excited about a cheaper power bill,” Fuge says.
Mandated by government bodies, customers can’t do much about the coming increases.
Yet hunting for an affordable power plan can make a big difference. “Electricity isn’t a nice-to-have – it’s an essential.”
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