Megan Woods: Getting Kiwis a fairer deal on the monthly power bill

Opinion 22/11/2019

By Megan Woods, Minister of Energy & Resources, Labour MP for Wigram.

Helping Kiwis with the rising cost of living is one of the long term challenges our Government is tackling. It’s why our Families Package gave hundreds of thousands of families an extra 75 dollars a week and we’ve given over a million New Zealanders up to $750 a year to heat their homes through our Winter Energy Payment.

And it’s why we are reforming the electricity market to level the playing field for consumers, so Kiwis get a fairer deal on the monthly power bill.

One of the changes in these reforms is around so called “prompt payment discounts.” The changes we are making are about extending lower prices to everyone. If you get a discount currently, you will keep paying that same low price under our reforms.

Budget advisors and other consumer advocacy groups argue that PPDs are really hidden “late payment penalties” that disproportionately hurt low-income consumers and, in many cases, are unrelated to the true cost of recovering late payments. The big power companies aren’t charging people who are a few days late with their bill the actual cost of chasing up late payments – instead they are charging hidden penalties that are much larger. Our reforms end this practice.

We’ve seen how well this can work. Meridian already dropped their hidden late fees late last year and what happened was exactly what we want to see: customers who were getting lower bills for paying on time kept paying the lower rate, but other customers were able to save $5 million dollars off their bills.

Experts have estimated that when all companies follow suit, that will take $45 million off the bills New Zealanders pay each month.

It will mean fairer and lower prices for everyone.

Groups that stand for consumers like ConsumerNZ have welcomed these reforms and told us that some people, especially people on low or fixed incomes like the pension, could save up to $40 a month off their power bills. That makes a huge difference for people trying to keep their homes warm in winter, and it saves taxpayers money when people don’t end up in hospital because their homes are damp and cold.

With a more competitive electricity system, more help through the Winter Energy Payment, and a guaranteed fair price while keeping low prices for people that pay their bills on time, our reforms are about helping New Zealanders heat their homes, stay healthy and meet their weekly budget.

Megan Woods is Minister for Energy & Resources and Labour Party MP for Wigram.