Fears older Kiwis hit hardest by scrapping of low-user energy plans

Garth Bray
Source: Fair Go

It’s set to be a cold and costly winter for thousands of householders who are low power users – including pensioners, singles and the members of the Geraldine Croquet Club. Yes indeed.

A change of Government policy – suggested by the electricity retailers themselves – means power prices are set to rise ahead of winter for those on the low user tariff scheme, who pay a very low daily rate to have electricity supply and a higher rate for each unit used.

People like 92-year-old Len Blackman, who’s just learned his fixed charges with Mercury will be doubling from 33 cent to 66 cents a day, pushing his bill up $11 a month on average.

In five years, that fixed charge will hit $1.80 per day, or $657 a year just to be able to turn lights and heaters on, with extra cost if they are running. Len’s worried about his friends and says winter’s the time a lot of them won’t put their heat pump on.

Mercury and Meridian have started telling customers to expect increases in a few weeks’ time, while Contact Energy, Genesis and TrustPower tell Fair Go increases will be coming for their customers either later this year or not until next year.

And in Geraldine, the local Croquet Club is already facing that situation, says club treasurer Karyn Close. The sports club is currently paying Trustpower $60-80 a month in fixed charges:

"Just to have this line along here connected to make a cup of tea and to have some lights to be able to fill in your score cards."

Their modest clubroom is 99 years old and running the lights and the water heater twice a week burns about $2 worth of actual electricity each month. They even tried to access power discounts for holiday homes owners by offering to sleep over at the clubhouse.

Trustpower told Fair Go it must abide by regulations so can’t offer the club a low user rate and will be phasing them out for other customers.

"Low use plans only helped some low use households while pushing others into greater energy hardship, including many low-income families with high electricity use."

Trustpower has decided to help the Geraldine Croquet Club with a one-off $200 community donation towards plans for a centenary celebration next year, which the club treasurer says was "very nice".

"We work really hard for any money we get, so something like that is very helpful in this environment," added Karyn Close.

Local lines company Alpine Energy has also encouraged the club to contact its grants scheme.

As for Len Blackman, after Fair Go got involved, Mercury offered to keep him on the same low fixed rate if he agrees to pay slightly more for the power he uses. Mercury Customer GM Craig Neustroski told Fair Go:

"We know a change like this will mean some households like Blackman’s face higher bills. But we also know the issue of hardship is much broader, and we’re focused on helping any customer struggling. We have a range of solutions in place like flexible payment plans or bill credits to help."

The changes follow a review of the electricity sector in 2019. Mercury supported removing the low user tariff says Neustroski.

"This regulation has had the perverse effect of forcing many large, low-income households to subsidise power for smaller or energy efficient ones."

Trustpower says the regulation also “created barriers for industry to distribution pricing reform”. What that means is, moving to a future with fewer fossil fuels will require upgrades to the power system. The industry wants smaller households to pay more towards those upgrades, but the low user scheme was shielding them.

“I’m paying a lower tariff for my electricity than many of the people that I represent who live in large households that are harder to heat and not as well insulated,” says Energy Minister Megan Woods who is also MP for Wigram in Christchurch.

When the Government agreed to phase out the low user tariff scheme from April 1 2022, it understood prices would also fall for an estimated 60 per cent of Kiwis – that’s around 900,000 households which will be better off, Woods says.

Power companies also don’t have to pass on the charges, but Mercury and Meridian have wasted no time in doing so, while others are holding back.

"At this time Genesis does not have any plans to change our residential electricity rates this calendar year, and no decisions have been made regarding changes to retail prices beyond this calendar year," says Genesis Chief Customer Officer, Tracey Hickman.

Others won’t put a date on the increases.

"Contact Energy will not be making changes to our daily low fixed user charges when it takes effect on 1 April 2022. We will take our time to carefully approach how and when we will implement the changes, to understand the impact and ensure we have appropriate support in place for our customers," says Contact Energy’s chief retail officer Matt Bolton.

Trustpower says it will review charges on a regional basis later this year adding "energy costs are impacted by many factors, all of which will be considered along with the impact of the changes to the low use regulations."

Energy Minister Megan Woods says she expects power companies to be very open about why bills are going up.

“Rest assured, we’ll be watching that really carefully and I’ll be talking with the power companies about that.”

TIPS FOR BATTLING BIG POWER BILLS FROM MEGAN WOODS

If a household switches out the five most used bulbs from incandescent to LED, they can expect to save around $70 a year in energy costs.

Installing an energy efficient heat pump will enable you to keep your home warmer without additional energy costs.

Low-income owner-occupiers should also check whether they are eligible for a Warmer Kiwi Homes grant, which will cover 80% of the cost of insulation and an energy efficient heat pump.

Call EECA on 0800 749 782 or visit https://www.eeca.govt.nz/co-funding/insulation-and-heater-grants/warmer-kiwi-homes-programme/ for more information.

Fair Go has also heard from Utilities Disputes - Tautohetohe Whaipainga, a free dispute resolution service for electricity consumers who may be able to help. Call 0800 22 33 40 for UDL.

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