The chill of rising power prices
What we pay for power continues to be a concern for many Kiwis.
Before you open your power bill this winter, you might want to take a seat. Another round of price hikes mean many of us are likely to be paying more to heat our homes over coming months.
Low hydro lake levels are also driving up prices on the wholesale electricity market. That’s hitting power retailers trying to gain an edge by selling “spot price” plans to consumers.
Spot prices are tied to the wholesale market. When hydro lakes are full, prices drop and power is cheaper for customers on these plans. But in dry years, it’s a different story. In the year to March, wholesale prices for electricity generation spiked a sizeable 29 percent.
Some companies are pulling back from spot price offerings until the outlook is rosier.
Not surprisingly, what we pay for power continues to be a concern for many Kiwis.
How concerned are you about your household power costs?
Our annual survey found just 11 percent felt power companies always charged households fairly. Most said they’d look more favourably on retailers if they lowered prices.
For 26 percent, household power costs remain a major concern. As we’ve found in previous years, a significant proportion (18 percent) have trouble paying their monthly power bill.
In the past 12 months, have you:
In the past 12 months, one in eight had overdue fees added to their bill because they couldn’t pay on time. Fourteen percent had borrowed from family or friends, while seven percent had taken out a loan to cover their bill.
Home heating costs
One in 10 Kiwis said they’d been refused service by a power company because they’d previously missed payments.
There’s no requirement for power retailers to supply consumers. So if you look like a bad credit risk, the company can turn you away.
You could also be cut off. Electricity Authority figures show there were 20,250 disconnections for non-payment of bills in 2019.
For these consumers, the only option to get back on the grid may be to switch to a prepay plan, where you have to pay for power in advance.
Seven percent of consumers in our survey reported having to switch to a prepay plan because they’d previously had trouble paying their electricity bill.
Despite paying for power in advance, prepay customers can be charged tariffs that are near the top of the market. We’re calling for mandatory standards to ensure consumers on prepay plans are treated fairly and don’t face disproportionate charges.
More than 100,000 households are estimated to be in energy hardship and can’t afford to heat their homes properly, according to the 2019 Electricity Price Review (EPR) report.
In response to the EPR’s recommendations, the government announced a $17 million package to provide support for these households and to fund a new consumer advocacy council.
To put that funding in perspective, last year alone Mercury Energy spent $17.7 million on advertising and public relations campaigns. That’s the equivalent of supplying 8850 homes with power for a year.
Could your next power bill be smaller?
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