Electricity and gas - are the low user plans being phased out?

Forums › Home Workshop DIY › Electricity and gas - are the low user plans being phased out?

rayonline

1734 posts

Uber Geek

#295496 1-Apr-2022 22:58

Coincidentally my contract comes to an end today. I had a look at various websites and they still provide a low and a standard user plan. Are they still available, surely the websites have been updated.

Cheers.

Kraven

729 posts

Ultimate Geek

#2895547 1-Apr-2022 23:05

Yes. Daily charges for low user plans will progressively increase each April until 2026.

https://www.consumer.org.nz/articles/low-power-users-to-be-hit-hardest-by-changes

Also, 1st April is typically when retailers will change their pricing. If you're not happy with the price from your current retailer, shop around, there are always better options out there and it's not a huge hassle to switch.

Scott3

3970 posts

Uber Geek

Lifetime subscriber

#2895612 2-Apr-2022 11:31

The requirement for power companies to offer low user plans is being phased out. They are still welcome to offer them if they want.

Phase out happens over Five years. So low user plans will still exist until 1 April 2027.

Maximum low fixed charge:

Prior to 1 April 2022 $0.30 a day

1 April, 2022 $0.60 a day

1 April, 2023 $0.90 a day

1 April, 2024 $1.20 a day

1 April, 2025 $1.50 a day

1 April, 2026 $1.80 a day

1 April, 2027 Regulations removed. Power companies are no longer required to offer customers a low fixed charge.

https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-consultations-and-reviews/electricity-price/phasing-out-low-fixed-charge-tariff-regulations/

And because such treads often get displeased comments regrading the changes:

"Problems with low fixed charge tariff regulations

The low fixed charge tariff regulations were introduced in 2004 to provide electricity plans with a discounted fixed charge that aimed to reduce power bills for low-use, low-income households. However, as the regulations are poorly targeted, they only help some low-use households while pushing others into greater energy hardship, including many low-income families with high electricity use. The low fixed charge tariff regulations also have unintended effects on households’ electricity use, create barriers for industry to undertake distribution pricing reform and increase complexity and confusion for consumers.

Phasing-out low fixed charges was a recommendation to government by the independent Electricity Price Review. The Review further recommended the regulations be phased-out over 5 years to help moderate the impact of the increasing fixed charges on most low-use households."

antonknee

1133 posts

Uber Geek

#2895662 2-Apr-2022 11:49

Single people and retirees get walloped again.

I don't really care about a massive low income family that pays standard daily charge and standard rates, and use more power because there's more of them - that's just the way everything works. We should be targeting support to them another way IMO. I understand the logic behind scrapping low user plans, the need for infrastructure, etc etc - it's nicely set out in that Consumer article - but this will have a huge impact on a lot of people right now at the worst possible time.

I'm not convinced the correct balance has been struck, and somehow I doubt power companies will adjust the variable rates to make up for it. Many have been told their daily charge and variable charge is increasing.

Also I must say I have to agree with the commenter in that Consumer article - why is it ok for power companies to show their rates excluding GST to retail customers?

RunningMan

8955 posts

Uber Geek

#2895665 2-Apr-2022 11:55

Exisiting thread https://www.geekzone.co.nz/forums.asp?forumid=141&topicid=289628

neb

11294 posts

Uber Geek

Trusted

Lifetime subscriber

#2896884 4-Apr-2022 17:30

Scott3:
And because such treads often get displeased comments regrading the changes:

The government, assuming that's where the text came from, is really good at providing explanations for policies that sound more like spin control than a real explanation. Consumer explains it much better:

Household electricity consumption has steadily dropped over the last 20 years - so much so that 68 percent of households are now low users. Over time, fewer and fewer households have been left to pay the standard fixed rate.  

The regulations were meant to help low-income households.  However, they have had the unintended consequence of penalising many of them.  This is because many low-income households have no choice but to use a lot of power – such as those with a lot of people living under the same roof or in houses with poor insulation. These households pay the higher fixed rate, as well as having a big bill for all the power they have to use.

MikeAqua

7779 posts

Uber Geek

#2897228 5-Apr-2022 15:42

Our apartment power prices have gone up dramatically (we are low users, as hot water is centralised). Our power supplier is blaming the reform. I think they're using it as an excuse, because it's the unit charge per kWh which has gone up.

Mike

cokemaster

Exited
4929 posts

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Retired Mod

Trusted

Lifetime subscriber

#2897307 5-Apr-2022 20:06

@MikeAqua - I would expect the daily prices to increase, not the kWh rate. Are you able to shop around for different providers?

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mattwnz

20155 posts

Uber Geek

#2897375 6-Apr-2022 02:38

Scott3:

The requirement for power companies to offer low user plans is being phased out. They are still welcome to offer them if they want.

Phase out happens over Five years. So low user plans will still exist until 1 April 2027.

Maximum low fixed charge:

Prior to 1 April 2022 $0.30 a day

1 April, 2022 $0.60 a day

1 April, 2023 $0.90 a day

1 April, 2024 $1.20 a day

1 April, 2025 $1.50 a day

1 April, 2026 $1.80 a day

1 April, 2027 Regulations removed. Power companies are no longer required to offer customers a low fixed charge.

https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-consultations-and-reviews/electricity-price/phasing-out-low-fixed-charge-tariff-regulations/

I can't see how these figures are right because the standard daily rate with my provider is currently only about $1 a day. It looks like they are increasing everyones daily rates if they are going up to 1.80 in 5 years. That is far more than what inflation should be. No wonder power companies are making bigger profits than ever. At least we haven't got the problem they have in the UK where their power prices are rocketing up as they move to clean alternatives. We already have clean power, as long as we keep building new generation to cope with the EV wave in the coming years.

Scott3

3970 posts

Uber Geek

Lifetime subscriber

#2897417 6-Apr-2022 08:43

mattwnz:

I can't see how these figures are right because the standard daily rate with my provider is currently only about $1 a day. It looks like they are increasing everyones daily rates if they are going up to 1.80 in 5 years. That is far more than what inflation should be. No wonder power companies are making bigger profits than ever. At least we haven't got the problem they have in the UK where their power prices are rocketing up as they move to clean alternatives. We already have clean power, as long as we keep building new generation to cope with the EV wave in the coming years.

Table is correct.

If your daily rate is $1 / day it means you are on a standard user plan and won't be impacted by this.

Should note the following:

1. There are many different lines companies, with different pricing structures. Some change less per day and more per kWh than others do for standard users. I am in Auckland in the vector area, and daily rates around $2 are typical for standard users.

2. Those rates are the maximum daily rates that retailers are allowed to charge low users. Retailers are still allowed to charge less than those amounts.