Struggling to manage the costs of rising electricity, some consumers may be finding the free ‘hour of power’ is not the cost-cutting magic bullet they hoped.
Waikato couple Samara and Sam Constable use as much power as they can between 9pm and 10pm daily to make the most of the free hour their Electric Kiwi plan offers.
They say it was this free hour that initially attracted them to the company, as they tried to save for a mortgage.
“We put on the washing machine, the dishwasher, the dryer, we have showers from 8pm so the cylinder is heating up from 9pm to 10pm,” Samara explains.
“We charge our eco-flow unit because that only takes one hour and gives us 2kw for the next day, which I usually use for working at home.”
Despite all this, the couple found their bills did not seem to be getting any cheaper.
To reduce them further, they would have to “change everything about our day”, Samara says. “I’d have to handwash the dishes, same with washing clothes”.
The pair had relocated to Paeroa from the North Shore suburb of Albany in Auckland five months ago, with their subsequent power bills 50% higher. While she knew rural living would be more expensive, Samara said she was “shocked” by just how much.
The hour of free power was taking over everything – “it’s starting to run our lives”, Samara said.
“We’re becoming so vigilant [and asking], do we really need that cup of coffee? Can I eat my lunch cold rather than heating it in a microwave?
“My husband is thinking about using the gas cooker we use for our 4WD camping trips to cook with.
“It seems so ridiculous we have to live this way – just to eat and also afford our mortgage.”
‘If you don’t take action, you could end up paying more’
Paul Fuge, the head of Consumer NZ’s power comparison website Power Switch, said Electric Kiwi was still one of the cheaper power companies, but electricity plans had become more complex, requiring consumers to change the way they consume power to make savings.
“That’s great for some households who can do those things, but some households just can’t, for various reasons, or they don’t want to.
“The danger is you could take up one of these plans and if you didn’t take any action, you could end up paying more.”
Power Switch and Consumer NZ’s call centre had received 3000 inquiries about electricity and gas this year – more than double that of last year. The biggest complaint overall was that many customers who want to switch could not because power retailers were nervous to take more on, he said.
Power Switch had seen a 75% increase in visitors to its website this year, and a 170% increase in the number of people trying to change provider.
There was “a real crisis” in the market and it was time for the Electricity Authority to take “bold action”, Fuge said.
“It’s a real shame because at the moment people are hoping to save money, but paradoxically retailers are reluctant to take on new customers versus a real surge in the number of people seeking to change to save money.”
Fuge said only 26% of consumers knew their energy supplier was now legally obliged to tell them if they were on best plan – but only if they asked.
This week, Consumer NZ started a campaign to make it easier for people to contact their retailer directly, using an online template.
‘Challenging time’ for energy sector
Electric Kiwi’s chief executive Huia Burt said any price increases faced by its customers were similar to what would be experienced with any number of retailers in the past 12 to 18 months.
“However there are always exceptions due to the complex interplay of regional network charges, peak/off peak pricing differences, individual usage profiles (seasonal and daily) and plan fit.
“Some of the big players have in the last few years been able to cross-subsidise unprofitable retail businesses with large profits on the generation side, but this is coming to an end and they are now reflecting these high wholesale electricity prices too.”
Competition had also decreased with Flick Electric and Frank Energy exiting the market this year, she said.
“It’s a challenging time for the sector, but we’re resolute in our dedication to doing better for New Zealanders and want to be part of the solution.”
Burt said her team had looked into why two households who spoke to RNZ might be facing higher bills and put it down to a “complex mixture of unavoidable price increases (particularly peak usage prices), the highly seasonal impact of increased winter usage at those peak times and the significant difference in network pricing between urban and rural areas”.
There was a publicly available dashboard provided by the Authority which showed the average pricing and consumption in a region, she added.
In Samara’s case, rural Waikato had some of the more expensive pricing in the country largely due to the cost of the network.
Cost of living putting pressure on budgets
Minister for Energy Simon Watts said he was hearing from more New Zealanders this winter experiencing energy hardship.
“Families are telling me they’re having to make tough choices-between heating their homes and putting food on the table. That’s not acceptable in a country like ours.
“The cost of living impacts, driven by persistent high inflation and interest rates under the last government, has put real pressure on household budgets.
“Energy bills are a significant part of that. As minister, I’m focused on ensuring our energy system is not only reliable, but also affordable for all Kiwis.”
The government was working to address those challenges “head-on”, he added.
“Whether it’s through targeted support for vulnerable households, improving energy efficiency in homes, or accelerating investment in low-cost renewable energy.
“Every New Zealander deserves to live in a warm, dry home without fear of the next power bill.”
