Your power bill should be easy to understand
The Consumer Advocacy Council calls for clearer power bills to make it easier for consumers to get the best deal.
New Zealanders are concerned about the cost of everything. Most concerningly, people are struggling to pay for the basics like food, rent and simply keeping the lights on.
One in five households has struggled to pay their power bill over the last year, so it’s no surprise that our Powerswitch team have been busy helping people check they’re on the cheapest power plan for their needs.
But unfortunately, even that task is a challenge for customers, with 73% of people we polled telling us they don’t understand their power bill.
Unfortunately, it’s a problem our Powerswitch call centre knows too well, too.
Paul Fuge, Powerswitch manager, says, “calculating electricity use is really complicated and we can’t expect the average person to understand it.
“We see low switching rates because there is barrier after barrier to accessing what should be very basic information about value for money. It’s a simple problem with a simple solution.“
We recently received this message from a frustrated customer: “I had a look at my power bills ... and found it was like trying to understand a foreign language. It seems difficult to compare providers with such difficult ways of calculating the bill and comparing apples with apples. I could switch and be no better off.”
The power of a well-designed bill
The Consumer Advocacy Council has just released a “model bill” in a bid to cut through consumer confusion. The bill contains a prominent “best plan” notice advising customers if they can reduce power costs by switching to another plan. It also sets out the key information consumers need to better understand their power costs and compare prices. At Consumer NZ, we undertook a literature review of electricity bill simplification to aid the council in designing the ideal bill.
The problem with bundling
To make things more complicated, power companies bundle services, which distorts pricing and makes it difficult for customers to compare prices and make informed choices.
For example, your broadband costs might be cheap, but it comes with a more expensive daily power rate. The Commerce Commission will push companies that provide bundled power into being more transparent about the value they offer, given consumers are often led to believe they are receiving better value than they are.
In Australia, power companies are required to display a “best plan” notice for their customers. It’s a simple way to give customers value and aligns with the steps outlined in the Electricity Authority’s Consumer Care Guidelines (a voluntary set of consumer-benefitting guidelines for power providers to follow). Those guidelines expect retailers to ensure their customers have every opportunity to be on the best pricing plan to meet their needs.
Power companies should be able to make a profit – people want to see innovation in the energy sector – to benefit both the planet and our pockets. But the delivery of electricity, power and gas is an essential service.
Power providers have a responsibility to their customers to ensure that they have fair and transparent access to the electricity they need.
It should be easy to understand your power plan because when you can interpret what you’re paying for, you can also easily compare your current plan with another retailer.
A bill that the average person can understand is a basic starting point, and it shouldn’t need to be a big ask.