Recent Consumer NZ research estimates that over the past year, 140,000 households had to take out a loan to cover their power bill.
“Across the country, the cost of electricity is a real worry, with one in three people placing it in their top three financial concerns,” said Jessica Walker, campaigns manager at Consumer NZ.
“Last week, we heard from someone whose power bill is overdue for the first time in more than 15 years of on-time payments. Even though they are barely using their heater this winter, they can’t keep up with the rising costs.”
According to the latest Consumer NZ energy survey, over 360,000 households found it hard to pay their power bill in the last 12 months. More than 250,000 households reported having overdue fees added to their power bill because they couldn’t afford to pay by the due date.
The survey found that two percent of households had their power disconnected at least once in the past year because they could not pay the bill.
“Disconnection puts you at risk of being rejected by electricity retailers in the future,” Walker added.
“For people who can’t secure a post-paid account with an electricity retailer, their only option is prepaid power.”
Consumer NZ found that almost one in ten households has been denied as a customer by an electricity retailer because of a previously unpaid bill.
Why Power Poverty Is a Growing Issue
“We heard from many people who are restricting their energy use, particularly using their heater, to keep their bills down. However, for a lot of people, it’s still not possible to keep up with the payments,” Walker says.
“The word that keeps coming through is ‘struggle’, and for many people, the rising costs and dropping temperatures have led to a sense of despair.
“We keep hearing about exceptionally high wholesale prices and the expectation these will soon flow through onto household bills. We think this means people who are currently just managing to scrape by will soon be struggling too.”
Many customers using pre-paid power are excluded from sharper promotional pricing that is offered to entice new customers to post-paid plans.
“We think, on average, households using prepaid power are paying more because their credit history means they are excluded from the sharpest prices offered by the cheapest providers on Powerswitch,” Walker says.
“We find it seriously concerning that many people experiencing hardship are unable to access sharper pricing, which could be the difference in keeping their homes warm this winter.”
“If you’re having difficulties paying for the power, you need to be warm and healthy. Contact your electricity provider to let them know and ask about its consumer care policy.
“Most power providers have a consumer care policy. If you think your provider isn’t complying with its own policy, you can complain to it, and if you’re still not satisfied, you can contact Utilities Disputes.”
Every year, Consumer NZ asks New Zealanders about their experience with their power provider to find out how consumers rate their experience. The data is from a nationally representative survey of 1,999 New Zealanders aged 18 and over conducted in March 2024.
The Role of Energy Companies in Reducing Power Poverty
In August 2023, Consumer NZ expressed concern regarding the cost of energy and surging profits for gentailers. From August 2022 to 2023, Meridian, Contact, Genesis and Mercury made a whopping $2.7 billion in profits, per the consumer watchdog. It equates to $7.4 million in profits daily.
“The optics of huge profits at the height of a cost-of-living crisis aren’t great. Three out of five New Zealanders are concerned about the cost of energy,” said Consumer Chief Executive Jon Duffy.
“New Zealanders have the ability to save on their power by shopping around, but that only goes so far. More work needs to be done to ensure consumers can have confidence our electricity sector is working to their benefit.
“We acknowledge that profits are a healthy and normal part of business, but there’s a question around what is excessive.
“The big four gentailers and their subsidiaries have significant market share, providing power to about 85 percent of the market,” said Duffy.
A lack of meaningful competition is also increasing the issue.
“It’s been 25 years since the Bradford reforms, which were intended to deliver cheaper power and increased competition – yet the vast majority of New Zealanders are with one of the original retailers or their subsidiaries – enabling those gentailers to continue making huge profits.
“Retailers that don’t generate electricity themselves have to buy electricity from the very gentailers they compete against at the retail level – we believe this is a deterrent to entry and is continuing to prove a barrier to genuine competition.”
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