Electricity retailers have been slammed by the industry's leading customer watchdog for sending out confusing power bills that make people pay more for electricity than they need to.
The charge came from the Consumer Advocacy Council, which was set up to scrutinise the industry after a sweeping review of power companies in 2018.
In a new report, the council says customers are paying on average $100 a year more than they need to, because they are not given straight forward advice on how they can pay less.
In fact, power companies usually have a variety of charging plans, but these often go unnoticed by the customer.
To resolve this problem, the Consumer Advocacy Council is calling for power bills to have a Best Plan Notice prominently displayed on each person's power bill.
“Electricity retailers and your power bill should help you make decisions to save, not spend,” says the chairperson of the Council, Deborah Hart.
“Power bills shouldn’t be a riddle. Retailers should all be helping consumers make better decisions about how they manage their electricity use. There needs to be simple and consistent information displayed on all bills."
Hart says there is a confusing array of plans on offer to customers, which can be simplified if each bill has a prominent notice showing the best plan, based on that customer's pattern of electricity use.
“Our research found 87% of consumers want this information on their bills."
Hart says a change could put money into consumer wallets, not into the profits of retailers.
“If, for example, 10% of households could save $100 a year by switching to a better plan, that would amount to $20m transferring from the profits of electricity retailers to the pockets of consumers.
“In a cost of living crisis, it’s even more important this happens as we know 65% of consumers are worried about the impact of power bills on their household budget."
Hart says a Best Plan Notice is printed on Australian electricity bills and it can happen here too.
“Right now, retailers are only encouraged to provide this information under the voluntary Consumer Care Guidelines, but they are not required to," she says.
"There needs to be an explicit rule that forces all companies to provide a Best Plan Notice every three months - and penalties if they don’t.
“The Electricity Authority should require this."
A big chunk of the power industry is represented by the Electricity Retailers Association of New Zealand (ERANZ). This includes the large generation/retail companies and well as smaller boutique firms.
Its chief executive Bridget Abernethy says these companies design their invoices based on insights from their own customers about what works well for them.
"Some of the Consumer Advocacy Council’s suggestions, while well-meaning, would be very difficult and expensive to implement, which could see the unintended consequence of costs being passed on to consumers," she says.
14 Comments
Totally agree, when my power plan came up for renewal with Contact Energy they recommended to me a new plan, on further investigation I found they had much better/cheaper for me plans available - fortunately I have created a spreadsheet where I can evaluate plans based on my usage, I don't expect most people go this far - but it is worth it if you have the skills and time
I mean its a total no brainer. Having worked in the companies, not hard for them to do either, because they know by customer exactly what usage they have and can easily run that data against their account type models. We actually did it for one of them yearly and it would trigger letters to a bunch of people using wrong plans. Not sure if thats still going though (probably not, it was a social good will thing), cos profits of that company have skyrocketed.
Bridget Abernethy is talking bulls$#t, the modelling is run in-house all the time, even if its just on spreadsheets. Yeah, it might cost them an extra million a year to action the modelling, but its not hard to do.
The transfer pricing mechanism between generators and transpower looks to me to enable the vertically integrated gentailers to develop some price hedging strategies that they do not necessarily share with just retailers..... Therefore it looks easier to the vertically integrated to offer better plans at tighter margins and lower risk.....
I would like to see a way better price paid to those supplying power into the grid from solar installations, this would move the dial big time on payback and support greater adoption, resilience etc. The problem is a co-operative small solar based generator just would not know what sunshine would occur a week out and have to offer low or end up buying generation at a loss.... They would be able to make profit if the co-operative could control the individual sites to push towards battery if the grid transfer price was low.
Genesis robbed me with a misleading bill. Actually claimed falsely that the line charge was X, when the line charge really was Y.
I got half the bill over several years refunded.
They denied they had done this to many other people. But when I raised that issue a senior manager and assistant flew the length of the country to reassure me. Facing potential refunds of millions of dollars.
"Very few" they said.
I don't believe them at all.
What confusion?
We lost power for 2 days during Cyclone Gabrielle. I checked on Powershop a few days later to see how much the fridges and freezers were sucking up during recovery and noticed that we'd "used" over 9kW on each of the days we had no power.
I sent a "please explain" email, and the reply basically suggested that the graphs they churn out are based on averaging and guesswork.
Nice one.
You can reduce those estimate numbers by updating the meter readings more frequently. I'm currently arguing with them that the reading (photo) I took when the power was disconnected the week before it was reconnected is still the same reading as the first date of service, and they don't need to send a meter reader. Since the house is empty it's literally a 50c discussion, but it'll become a $40 discussion if I have to drive there twice to let the meter reader in since the box is inside.
Power companies in general seem to be holding onto very outdated business models and processes. They'd rather take the estimate of the previous company (way higher than actual) over my photos of the actual readings. And they need someone to be onsite and available for the next 6 hours before they'll send someone to reconnect the power. Can't pre-book for when you're actually available. Feels very 1950s housewife.
Once had Mercury offer a excellent plan so said yes.
Couple of days before the change over we get an email to soy sorry the sales person was wrong you will now be on this rate.
Ah no, that's about 20% more than we're paying now.
Month after that a electrician turns up to disconnect our power at Mercury's request. Lucky we were home and were able to tell him to bugger off.
Always assumed due to inbuilt cynicism that the salesperson knew all along they were offering a unavailable rate but it was just a way to hook you. As for the power disconnection.....
I found upon digging down into the various plans that any potential savings were not worth the bother. If they cut your night rate they up your daily charge to cancel out the benefit.
Not surprising really. They don't exist to give the stuff away.
As for confusing bills - try Vodafone / one.nz for hard to fathom bills.
As such, I expect National and Labour will be announcing policies asap before the election to address it if they form the next Government.
Housing affordability? Too hard because the economic textbooks the use never considered a price would be set solely based on supply.
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