April power bill shock in store for many

You might want to brace yourself for a bigger power bill than normal this month. We’ve been trawling through notifications sent by power companies to their customers about price rises kicking in on 1 April – and some people are in for a big shock.

While some customers are facing only modest annual price increases of $100 or so (or, in a few cases, even a slight decrease), we have also seen examples where some unfortunate households will see annual costs rise by $1000.

In what our expert on power prices Paul Fuge is calling the “perfect storm”, there are four ways bills could be hit.

First, there’s the industry’s phasing out of low-use power plans, which has given companies permission to double how much they currently charge low users for having electricity supplied to their home.

Second, people with a gas connection will also be affected by gas companies getting the green light to charge more for supplying gas, to recoup some of the cost of their infrastructure.

“The biggest losers will be low-use dual-fuel consumers – that is, consumers who use lower than average amounts of electricity who are also gas users,” Fuge said.

See our recent articles on the changes to low user charges and increasing gas prices for more details.

And finally, the actual prices of both power and gas used are going up for a lot of people, as we’ve seen in letters notifying consumers of price changes taking effect from 1 April. Many upset consumers have shared their stories with us.

“April 1 is traditionally the day power companies put their prices up, but this year is shaping up to be a real doozy,” said Fuge, Consumer NZ’s Powerswitch manager.

“It’s a perfect storm, all these changes have come together simultaneously. Just one would be bad enough.”

Consumer chief executive Jon Duffy shared his notification from his retailer which shows it’s not just a matter of a few extra dollars each month. His family’s bill for their Wellington home is one hit by a quadruple whammy of rises. Their power company will put up the daily charge for supplying power and gas as well as the cost of the power and gas they use. Within a year they will pay about 25% more, which will be $850 more (about $70 a month).

At Consumer, we’ve been as busy as beavers this month updating the prices in our Powerswitch database. Duffy said he’d be checking out now much he could save by switching to another company. Updated power prices will be available on Powerswitch from Monday, 4 April.

Fuge said it literally pays to check Powerswitch: “If the power companies were all putting their prices up it wouldn’t matter so much, but we’re seeing quite a different approach to the low-user plans and other changes across the various retailers.”

“Some are putting it up as much as possible, some are just putting it up a little, while other retailers are leaving low fixed charges at their current levels for the time being. Because of this, it’s really important to check you are not paying too much. A retailer or pricing plan that was once considered a lower-cost option may no longer be so.

“Many consumers tell us they just want to find the cheapest deal but find electricity pricing, discounts and all the different providers’ various offers a bit overwhelming. We get it. It’s mind-bogglingly difficult for consumers to make sense of it all. That’s why Consumer NZ provides Powerswitch, our free and independent electricity and gas price comparison service. If you want to find the cheapest power, visit Powerswitch.org.nz. It only takes a few minutes and you could save hundreds.”

$1000 for half an hour’s work

Many customers will have received letters recently from their power company telling them of today’s changes. But while Fuge said a lot of people would have a bit of a grumble and then just throw the notice in the bin, he had an amazing example of why you should take action instead.

His colleague at Consumer, Kirsty, had shown him the notification letter she received from her retailer. The amount Kirsty would spend on gas over the next 12 months was going up so much – $906 a year – that Fuge wondered if there’d been a mistake.

“I really thought they might have put a decimal point in the wrong place or something, so I said she should contact them and ask if there had been a mistake.”

An email back from the retailer offered to put Kirsty’s household on a different plan that would see her pay $52 less for gas over a year than what she had originally been paying – saving her from having to pay nearly an extra $1000 over the next year!

Kirsty was so brassed off with her retailer, she used Powerswitch to find another provider – who, as it turned out, had an even better deal for her. It really does pay to know the deal.