People who stay with one power provider were often paying higher bills than they needed to, Consumer NZ said. Photo: 123RF
If you are struggling to pay your power bill, a good first step could be to simply ask your current provider whether it is charging you too much, Consumer NZ says.
Its research has shown about 300,000 households had overdue fees added to their bill because they couldn't afford to pay their power bills on time last year.
Around 150,000 households had to take out a loan to cover their power, not including people who borrowed from family or friends.
But Consumer NZ spokesperson Jessica Walker said some people might not realise the options that were available to them to ask for help.
Since April, electricity retailers have been bound by the Electricity Authority's consumer care obligations, which set rules for how they communicate with and support customers.
They include a requirement that power companies must tell customers, if they are asked, about any plans that would be a better fit for them.
The retailer has to voluntarily disclose the information when a customer is signing up, or if the retailer knows the customer is struggling.
Walker said while looking around at what other retailers could offer was often a good way to save, there were people who did not want to switch or could not.
"There's a significant number of people who can't switch because of a poor credit record. That means they either have to stick with their existing provider or switch to a prepay plan, which carries a greater risk of disconnection," she said.
"Unless you're signing up with a retailer or your retailer knows you're struggling, then you could be stuck paying more than you need to with that retailer. So, ask your retailer, 'Do you offer any other plans that would be better for me?'"
Consumer is offering a template to help people approach their power company.
She said people who stayed with a provider were often paying higher bills than they needed to.
"They often think because they've been with the retailer a long time the retailer is looking after them and giving them a good deal and unfortunately the reality doesn't tend to be like that. We call it a loyalty tax.
"A lot of the time if you stay with a company you're probably paying more than a brand new customer would pay."
She said people should also ask their providers for information about their power usage to work out whether a different type of plan would work for them.
Time-of-use plans, which offer cheaper power at off-peak times, could work well for people who could move their power use.
"People who can do most of their high electricity usage activities in off-peak times can absolutely stand to save money. But an awful lot of families actually can't shift their activities, maybe because the kids are in bed or maybe they're working nights.
"Or maybe they just don't want to have noisy appliances running at night time… I think it's really vital that somebody doesn't just assume that switching to off-peak will save them money because if they're still using a lot of their electrical appliances during the day it could end up costing them more...
"So it's about 'is there a better plan for me?', and 'can you help me understand my usage?'"
Consumer puts the new rules to the test
Walker said 10 people from Consumer got in touch with their retailer and asked, and two were told they could save money and [received] good information about their usage.
"Other people were given information ... but you know, go away and weigh it up. Other people were told 'you're on the best plan for your needs'.
"We think that for a few minutes' work and the fact you can stand to save, it's time and energy well spent. Our overarching message is still for those who can, compare the market to se if you're better off switching."
She said about half the respondents to Consumer's surveys said the cost of energy was one of their top three financial concerns.
"Twenty percent of households struggled to pay the bills last year so if we extrapolate that out, that's 400,000 households. There's absolutely no shame in telling your retailer you're struggling to pay. There are things they can do to help you. Nobody wants to cut the household off."
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