Many whānau in Aotearoa experience or face energy hardship. Some use less electricity than is necessary to stay healthy so they can lower their bill and make it affordable. Others have difficulty paying their bill and face having their electricity disconnected.
To help address this issue, the Electricity Authority implemented the Consumer Care Guidelines in 2021. These voluntary consumer protections are meant to ensure energy retailers help whānau avoid energy hardship. We wanted to find out:
- how well the guidelines have been taken up and implemented by retailers, and
- if they’re helping to reduce energy hardship across the country.
FinCap conducted research from April to June 2023 to assess the effectiveness of the Consumer Care Guidelines. They explored their effectiveness in the context of both everyday life, and times of significant disruption to communities. In particular, they looked at how effective they were during Covid 19 alert levels 3 and 4, and Cyclone Gabrielle.
FinCap's research showed clear inconsistencies in how electricity retailers are implementing the Consumer Care Guidelines. The voluntary nature of the guidelines has meant that how well they're implemented is at the discretion of each retailer.
Some of the other findings from the research showed that:
- the amount of electricity required for a healthy home is unaffordable for many
- consumers either don’t know about the guidelines, or don’t trust that voluntary guidelines are reliable
- retailers can be inflexible when establishing payment plans, and don't always consider what is realistic
- accessing help from contact centres is often difficult for consumers. It’s much easier for financial mentors who know the ‘right’ language to use when talking to them.
However, even though the guidelines are voluntary, FinCap did find that they may have influenced electricity retailers to provide better help to their customers than expected during Covid-19 and Cyclone Gabrielle. But many electricity consumers are still facing issues with debt due to these events, and they’ll continue to face ongoing financial issues if action is not taken.
The conclusion FinCap’s research draws is that to be fully effective, the guidelines need to be mandatory, with the protections in some areas strengthened. Making the guidelines mandatory is the only way to ensure electricity retailers provide appropriate help and support to vulnerable consumers facing energy hardship.
In response to FinCap’s research, our Chair, Deborah Hart, said:
“The FinCap investigation strengthens the case for protections that ensure all retailers treat customers fairly and consistently when they are facing challenges. Without strict, enforceable rules and penalties, retailers can easily do what they choose when dealing with their customers.”
The Electricity Authority will be consulting on ways to improve the Consumer Care Guidelines later this year. We'll continue to advocate for the guidelines to be mandatory. We'll also recommend the Electricity Authority impose penalties on retailers who don’t comply with them. Protecting vulnerable electricity consumers is too important to be left to a voluntary set of rules that some retailers choose to follow, and others don’t.