As the winter power bills start to bite, research by Consumer NZ has found half the nation’s households have stayed loyal to their power provider for at least five years. Loyalty could be costing those customers hundreds of extra dollars each year.
“Essentially, over a million households are probably inadvertently paying a loyalty tax,” says Paul Fuge, who manages Powerswitch, Consumer’s free price-comparison website.
Many people think all power providers charge around the same, but that’s simply not true, Fuge says.
“You could be using the same amount of power as your neighbour but paying much more than them.”
The price a household pays for power varies significantly depending on their provider, plan type and location.
According to Consumer, energy retailers tend to offer their best pricing deals to new customers. Existing customers don’t reap the same benefit from the promotional perks.
Fuge says: “What really gets people fired up is coming to Powerswitch and finding not only could they be getting a better deal with another retailer, but often they could also get a better deal from the retailer they’re already with!
“Too many consumers – especially those that have been with their retailer for a long time - understandably assume their retailer will reward their loyalty and look out for them by letting them know when a better deal comes along. To be fair, some do, but, unfortunately, not all.
“Power prices are already high, up 20% in the past two years alone. Don’t add a loyalty tax on top. The average annual saving for people who switch on Powerswitch is now around $450.”
Bundles need an abundance of caution
Bundles continue to be popular, but Consumer recommends would-be bundlers proceed with caution.
Three in 10 energy customers are on a bundled deal. This means they have multiple services with the same provider.
“A quarter of New Zealanders say bundled deals are important to them when choosing a provider. Similarly, a quarter of people say promotions, such as free electronics or appliances, are an important factor when choosing who to give their custom to,” says Fuge.
“In our experience, people who bundle tend to get tied in with their provider because the barriers to switching appear more complicated. In reality, once your contract is up, a bundle should not be a barrier to switching. You might be paying over the odds for multiple services and could save even more by splitting out your utilities.
“We urge people to do their homework before signing up for a plan with a free appliance. Chances are you will be paying for that appliance through higher-than-average power prices throughout the duration of your fixed-term contract.
“Pay less for power this winter, and make today the day you say no to a loyalty tax.
“It only takes a few minutes to compare power plans and switch for savings on Powerswitch.org.nz.”
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