We reckon your power bill should be simple to understand. That way you can know what electricity you're consuming and when and whether you have got the best electricity deal for you. Some power companies do this well, others not so well.
Consumer NZ has a really useful price comparison site, Powerswitch, which has been a big help for many consumers who might want to change retailers, but it’s not used nearly enough. So we thought it was time to take a closer look at one of the problems - that some consumers can’t easily find the information on their power bill that would enable them to easily use Powerswitch.
We’ve teamed up with Consumer NZ on a project investigating how different retailers present their bills and work out what needs to change to help consumers.
First up, we’re looking at all kinds of research that’s already been done overseas and the findings are pretty clear. Consumers switch off from getting to grips with their power bills when they’re just too hard to understand. This discourages them from shopping around so they end up staying with their retailer out of habit. It’s just too hard to change. And if they feel like that, they’re not making the effort to find a power plan that may better suit their budgets. In other words, they could be missing out on saving money.
The converse is also clear; when power bills are well designed and contain easy to understand information, consumers are more confident to check out other electricity deals. Consumer NZ reckons if we could increase switching by just 10%, consumers could save $70m a year.
The problem is that there is no standard approach to how information is presented by electricity retailers. The same information can be presented in many different ways, and in many different places. And some key information may not be displayed at all. All that makes it much harder for consumers to compare plans or use a power switching website.
The problem’s been tackled overseas already and regulators in the US, Europe and Australia now require retailers to present key information in a consistent way.
As part of this project, we’ve been talking to retailers and gathering their bills so we can compare them. With these bills in hand, we are developing some ideal power bills which we will test with consumers at focus groups to be held around the country. This will allow us to canvas the views of people directly on what they like and what they don’t like about their power bills.
We’re hoping to find some really innovative approaches by some retailers and work out some ways to simplify and standardise bills. This will help us come up with an approach to bills so consumers can more easily navigate their information. The easier it is, the better informed they will be, and so the better equipped they will be to assess whether their current plan is the right one for them.
We are already talking to retailers and will work with them on what is possible. We’ll be encouraging them to make changes to their bills in line with our research and what consumers have told us they need. And we are talking with the regulator, the Electricity Authority about the project as well.
Watch out for our findings in the new year..
We know from consumers, the electricity sector and social agencies that many consumers struggle with paying for their electricity and consumers are concerned that the price they pay may not be right.
It will always be our job to consider the price of electricity and to ensure residential consumers and small and medium businesses pay a fair price for electricity.
On behalf of small consumers, we will make submissions on decisions that affect the way consumers are charged. We’re also talking with the Government, regulators and those in the electricity sector about the price of electricity.
Here’s some of our public advocacy in the media on ensuring the price of electricity is fair for small consumers.
The point of my focus is on Tiwai - opinion piece published in the NZ Herald 2 August 2022
Energy Minister defends state-owned 'gentailers' after their profits double(external link) - Stuff 24 August 2022
And our recent submission to the Electricity Authority on efficient pricing by distributors, the companies that own the power lines.
We’ll soon be launching two surveys to test what consumers think about electricity.
One survey will canvas the opinion of residential consumers, the other, small and medium sized businesses. We’ll be asking consumers a whole range of things that might matter to them when choosing electricity retailers, when working out their bills and their understanding why prices change. In short, we will gauge what matters most to residential consumers and small businesses.
We’ll be doing the surveys every six months at the start on so we can get a regular download from consumers on all the things that concern them.
We’ll share the information we learn with consumers, regulators, the electricity sector, government and social agencies so we are all working off the same information to make things better for residential consumers and small and medium-sized businesses. The research will help us advocate for changes that can help consumers be treated more fairly by the electricity market.
Watch this space for the results of the first surveys.
Many consumers, particularly those having real difficulty paying for enough electricity for their wellbeing, are on prepay contracts.
We know for some people prepay helps them to budget and is a useful way to manage their electricity. But for some it’s problematic.
We’re investigating whether prepay electricity is fair and what can be done to improve it. We will work with retailers and regulators on our findings to help them make any necessary changes.
We expect the first phase of our investigation to be completed later this year.
Helping consumers to understand their power bills is key to the power bills project. But we’re also working on another project that’s closely connected to this.
We want consumers to be given their electricity consumption data annually in a way that they can best understand it. We know it will help them navigate what’s best for them.
We’re working on this with the Electricity Authority, which is the regulator of the electricity market.
Expect to hear more about this early next year.
As well as the projects above, we are focused on two other areas.
Some consumers find themselves struggling to get enough electricity to support their wellbeing - it’s called energy hardship.
We have one project we are working on that is clearly linked to energy hardship and that’s the prepay project, described already.
There are many causes of energy hardship and finding solutions will need the combined efforts of many. We’re working with the Energy Hardship Expert Panel, social agencies, government and the electricity sector on this. Together, we believe we can make a really positive change for consumers.
Expect to hear more about our work on prepay electricity later this year and on other possible projects next year.
Find out more about the Energy Hardship Expert Panel on the MBIE website.
Electricity and how it gets to consumers is complex. We aim to help simplify it for small consumers where-ever possible.
We’re working alongside those in the electricity sector to understand what they can do to simplify how they communicate to their customers. That’s what our bills project is all about for starters.
We’ll also be explaining things we think consumers need to know.
Here’s an opinion piece we wrote on how the system operator, Transpower, could simplify things for consumers. We’ve also been talking with them about how they could better communicate with consumers generally.
Consumers need to know what power challenges lie ahead - Opinion published on Stuff, 28 June 2022