Source: MakeLemonade.nz
Ōtautahi – New research from Consumer NZ has found most prepay customers could be paying about 15 percent more for power.
Prepay customers tend to be Aotearoa’s most vulnerable electricity consumers, often unable to sign up for monthly electricity plans because of poor credit ratings.
Prepay customers in Wellington and Tāmaki Makaurau could be paying about 15 and 11 percent more, respectively, than their pay-monthly counterparts. Ōtautahi residents on prepay could be coughing up a whopping 17 percent more for their power.
On average, there were 15 cheaper power plan options ahead of the prepay option on the Powerswitch price comparison site.
“Households on prepay pay more because they are excluded from the cost savings offered by other plans in the market – including the time-conditional plans which offer significant savings,” Consumer NZ campaigns manager Jessica Walker says.
For electricity retailers, prepay is a handy debt management tool where the customer carries all the risk. It seems remarkably unfair that people already struggling to keep their lights on are forced to pay more for their power. Prepay customers pose no credit risk to their retailer, Walker says.
New Zealanders on prepay are automatically disconnected from their power supply every time they run out of credit.
There are no official records of how many households on prepay are going without power – with electricity retailers not obliged to report this.
It’s unclear how many people are surviving the winter with no access to heat, light, hot water, or the ability to cook in their homes.
Based on statistics shared by a prepay power provider last year, Consumer estimates that around 50 prepay households are going without power every night.
With the cost-of-living crisis deepening, there is a risk of more households moving to prepay. Consumer’s 2023 power company satisfaction survey found six percent of households had switched to prepay because they had trouble paying their power bill.
The same survey highlighted two percent of households reported their power supply was cut off in the last 12 months because they could not pay their bill.
The findings equate to around 40,000 households going without power at some point, because they could not afford it.
Consumer NZ is concerned that an increasing number of households will be unable to keep the lights on. We believe more investigation is needed so that regulators and policy makers have a clearer understanding of what’s going on.
Recent Consumer research found around one in 10 households had an electricity retailer refuse to take them on as a customer because of previously missed power payments.
