The ‘unkind’ reason some power companies give for disconnection fees

“We’ve had conversations with some companies and a couple of them have raised the point that they see these disconnection and reconnection fees as having a deterrent value. So in other words, if they threaten the fee then people are more likely to engage with them and therefore avoid disconnection,” Day says.

“Encouraging customers to reach out for support is a good thing but there are far kinder ways to do that and these fees can have the opposite effect.”

She said the threat of being disconnected from electricity was enough of a penalty anyway. “It just seems redundant to add another penalty.”

Day says it was also incongruous for companies to have wellbeing schemes where they say they’ll help people if they can’t pay their bill, but then use the threat of a fee as a way to get people into those programs.

“There will always be customers who are too stressed out to engage. They’re in debt and their power’s getting cut off. The last thing they need is extra fees.”

Our 2024 energy survey found 2% of households have had their power disconnected at least once in the past year because of unpaid bills.

As part of its research, Common Grace found the cost of disconnecting and reconnecting ranged from $30 to $235 if a house had a smart meter – even though the process was done entirely digitally. When someone had to be sent to manually disconnect and reconnect power at the house, the combined cost could be up to $300.

Day said when the companies were asked to explain the cost, two said they were just passing on the cost of using a metering company and one – Flick – broke down its fee to show how it reflected actual costs.

“Other companies wouldn’t tell us what made up their fees. This left us with no transparency about whether the fees reflected actual costs or why they vary so much,” Day says.

Day says Contact Energy’s decision to drop the fees last week shows it’s possible. As the power company of 19% of New Zealanders, there will be thousands who will benefit from the recent decision, she says. Toast Electric and Nau Mai Rā also don’t charge the fees.

The Electricity Authority (EA) has acknowledged Common Grace’s petition – signed by more than 8,000 people – asking it to ban disconnection and reconnection fees. The EA’s chief executive Sarah Gillies said under the Consumer Care Guidelines, which will become mandatory, fees must be reasonable and reflect actual costs.

“This will support us as we work to explore the broader implications of banning disconnection and reconnection fees. This involves evaluating how such a change might impact competition in the market and its long-term effect on consumers,” Gillies said.