Researching electricity billing in NZ
We’ve been researching how electricity bills could better provide consumers with useful information about their power usage and their plan.
Overview
We think electricity bills should be simple to understand. They should give consumers clear information about their power use and what it costs. They should also tell consumers if they’re on the best pricing plan and, if not, how much money they could save by switching.
Consumer NZ has a useful price comparison site – Powerswitch – which has been a big help to many small electricity consumers in New Zealand who wanted to change their electricity retailer and switch up their pricing plan. But it hasn’t been used as much as we'd hoped, so we decided to take a closer look at why that is. What we found is that currently, power bills aren’t providing consumers with the information they need to be able to use tools like Powerswitch.
Our research
We investigated how different retailers present their bills, to work out what needs to change. Over the last year, we’ve talked to both consumers and retailers across the country, and researched how other countries’ electricity billing works.
During the course of our research, we learned that consumers don't engage with their power bills if they’re too hard to understand. This discourages consumers 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 won’t make the effort to find a power plan that better suits their budget. In other words, they could be missing out on saving money.
In contrast, when power bills are well designed and easy to understand, consumers feel more confident checking out other electricity deals.
Key findings
Retailers don’t always ensure consumers are on the best plan
The cost of power is putting pressure on household budgets. Our latest survey found 65% of consumers were concerned about power costs, up from 58% in 2022. And household budgets can be squeezed tighter when power companies don’t take steps to ensure their customers are on the cheapest plan for their needs.
Under the Electricity Authority’s voluntary Consumer Care Guidelines, companies are expected to make efforts to ensure customers are on the ‘best pricing plan’. However, budgeting agencies that work with consumers to help them manage their bills say this doesn’t always happen, and consumers end up paying more than they should.
Research carried out for the Electricity Price Review suggests the extra paid by consumers when they’re not on the best plan for their needs could run into millions of dollars annually. A simple way to fix this is to require retailers to put a prominent notice on power bills telling consumers if they could save money – and how much – by switching to another plan.
This is already happening in Australia. New rules there will require electricity companies to include a ‘best plan’ notice on bills informing customers whether they’re on the best pricing plan for their needs.
Our survey research found that 87% of Kiwi consumers think this information would be useful on bills here too.
Consumer sentiment survey 2023
Consumer Care Guidelines [PDF 875KB](external link)
Electricity Price Review: Final report [PDF 854KB](external link)
Power bills don’t always contain the information consumers need
At present, there’s no standard approach to how information on power bills is presented by electricity retailers. The same information can be shown in different ways and appear in different places on bills.
Information that helps consumers compare power plans can also be missing. For example, knowing how much electricity you’ve used in the past 12 months can be helpful when using price comparison sites. However, bills don’t always include this information.
Without this data, it’s harder for budgeting agencies to check if the consumers they’re working with are on the right plan.
We know billing is the top cause of complaints to Utilities Disputes. While the nature of these complaints varies, poor-quality information on bills is one factor that leads to disputes.
What we did next
We decided to develop a model electricity bill that shows how power billing could be simplified for consumers, and give them the information they need to manage their power usage. We’d like to see electricity retailers here in NZ adopt it as a template for their bills.