This week in Parliament I questioned Energy Minister Simon Bridges about the high prices facing some of our most vulnerable families who use pre-paid electricity.
The Government is fond of telling people to shop around to get a better power deal – in fact, that’s pretty much their only policy to help households lower their power bills.
But many pre-paid customers can’t shop around, because in seven regions of New Zealand there is only one pre-paid electricity retailer. If you live in rural Northland, the Hawke’s Bay, the central North Island, Nelson, Tasman, rural Canterbury, or the West Coast, the pre-paid market is a monopoly. There’s no competition. In many other regions there are just two pre-paid retailers.
Many pre-paid electricity customers are getting ripped off.
This lack of competition means many pre-paid electricity customers are getting ripped off. Nationwide, it’s 14% more expensive on average to buy power through a pre-paid plan. Compared to the cheapest standard post-paid plan, it is 25% more expensive for an average family household to be on a pre-paid plan in Auckland, 24% more expensive in Dunedin, 20% more expensive in Northland, and 18% more expensive in Christchurch.
Absurdly, when I challenged Simon Bridges about this, he said he thought there was “an exceptionally competitive market” and that when it comes to pricing, “pre-paid is competitive with post-paid.” He’s just plain wrong.
Many pre-paid electricity customers choose a pre-paid plan because they have low incomes and it helps them budget. Others are forced onto a pre-paid plan by their electricity supplier because they’ve had trouble paying bills in the past.
58% of pre-paid electricity households with children have run out of credit and gone without power in the space of a single year.
58% of pre-paid electricity households with children have run out of credit and gone without power in the space of a single year, according to a study in the New Zealand Medical Journal.
With the winter chills approaching, these families face the very real risk of going cold this winter and that’s not good for their kids’ health.
I challenged the Minister to develop an industry code of conduct for the pre-paid market, to make sure families are getting a fair deal. This code of conduct could ensure fair pricing, do a full inquiry into whether there’s sufficient competition in the market, regulate when and how power can be switched off, and make sure it’s easy for households to monitor their power usage and top up their account when needed.
There are some pre-paid power retailers in some regions that are doing a great job, providing price-competitive power, and doing right by their customers. But unfortunately this doesn’t apply to all retailers in all parts of the country.
If the National Government won’t step in to help families with pre-paid power who are getting treated poorly and charged too much, then over the coming months I’ll be putting pressure directly on the industry to raise its game.
07.05.2015: Gareth Hughes pre-paid power question to Simon Bridges.