By Kate Harvey
Content Manager | Pou Whakahaere Ihirangi
Once the domain of energy nerds, time-of-use power plans (also known as off-peak pricing plans) are about to become a lot more mainstream.
Power companies with 5% or more market share must now offer a time-of-use plan. There are just five companies that applies to at present: the four big gentailers – Mercury, Genesis, Contact and Meridian – plus Powershop. Together, they cover about 85% of the market.
How do time-of-use plans work?
Time-of-use plans charge a different rate – or sometimes offer free power hours – outside the peak power time. Peak times are the couple of hours either side of the standard 9 to 5 workday. Time-of-use plans often reward you if you can shift your power use to the middle of the day, after 9pm or the weekends.
Many New Zealanders have already got into the habit of putting their dishwasher on late at night or saving the laundry till the weekend to make the most of these plans.
Having even more of us on them will be a good thing. When there’s high demand for power during peak times, especially in winter, that’s when the coal and gas stations have to be fired up. Shifting a good chunk of the country’s energy use to outside the peak means less pressure on the system.
Who they’re good for
At Consumer, we’re a fan of time-of-use plans when they’re used by people who are able to make the most of them by moving most of their power use to the cheaper or free times. We’ve seen people save a lot of money using them.
But Paul Fuge, manager of our Powerswitch website, says the worry is people will blindly sign up to one thinking they’re a cheaper choice, without understanding you need to make lifestyle changes to get the benefits.
“For some people it might work out well to have a plan that gives you free power on the weekend. Let’s say they charge their car to get through the week and get all their washing done. But for many households, time-of-use pricing simply won’t suit. When we had little kids, the washing machine and dryer were constantly running. If we’d waited for cheap power, we would have been buried under a pile of nappies,” Paul says.
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Who should avoid them
Paul does worry that making these plans compulsory at the big retailers sends a message to consumers that they’re a cheaper choice. But that’s only the case if you shift a portion of your power use to the agreed times when power is cheaper. Power at the peak times is usually higher.
“So, if you do all your power consumption just as you were, you’re now paying 40 cents an hour in those peak times, when you were paying 25 cents before – so that’s the danger,” Paul says.
“People might have the perception that if I move to time-of-use I will save money and then they’ll get the next bill and go ‘I’m paying more’ because they haven’t changed their behaviour.
“And particularly when English isn’t your first language, if you go and choose the plan that looks the cheapest and you don’t understand you have to do certain things to get that good price, then you’ll get a massive bill.”
Is a time-of-use plan right for you?
The way to work out if one of these plans is going to work for you is to ask your power company for your power consumption data. You can then see when you’re using the most power and what type of plan might work for you.
“With that knowledge you can then go to Powerswitch and use the filter to tell it you want to see time-of-use plans,” Paul says.
It’s also a good idea to choose an open plan, rather than get locked in, so you can change your mind.
How to make the most of a time-of-use plan
Paul recommends having an honest conversation with your household, though, about whether shifting your power usage is sustainable.
“It can be exciting to start with, because you’re kind of gamifying the system, but it’s easy to fall back into old habits.”
For some households, though, shifting to time-of-use is a no-brainer.
“If you’ve got a newer EV, taking advantage of a time-of-use plan can reduce your charging costs by 40 to 50%.”
Once you’re on a time-of-use plan, get familiar with your power company’s app, so you can see if you’re successfully shifting your power to the cheaper periods.
Case study: How Stephen saves money
Stephen Burrough built our Powerswitch website two decades ago and still works behind the scenes making sure it has all the latest power plans in its database. There are thousands of them!
He jumped on a time-of-use plan early, choosing one that gives him free power between 9pm and midnight as he and his wife are night owls.
“Our main uses of power were doing the washing, sticking the dishwasher on and putting clothes through the clothes dryer,” Stephen says. “So, we basically changed to a regime where we moved those to just after nine o’clock each night.”
At 9pm they turn on the dishwasher and washing machine. When the washing machine finishes, they put the load in the dryer and go to bed.
His power bills in summer are between $100 and $140 a month. He says they’re not tempted to try and move more power to late at night, because at present what they do is easy.
“If we tried to deliberately change our lifestyle we most likely wouldn’t maintain it. You need to ask whether it fits in with your lifestyle, and if you can make minor changes but generally live the same, then it’s worthwhile.”
