The electricity market must work harder for disadvantaged households
Households facing financial hardship or credit barriers are being left with limited electricity retailer choice, forced onto prepay plans, and may be exposed to higher costs and greater energy insecurity, according to Entrust.
Denise Lee, Entrust Chair says that Entrust welcomes the Electricity Authority’s consultation on improving consumer access and choice for households that face barriers to participating in the electricity market. The Government and Electricity Authority have been making successive improvements to consumer protection, but more work is needed.
“Electricity is an essential service, yet the market is failing disadvantaged households.
“No Kiwi home should be left without practical and affordable access to power because of hardship, credit-related barriers, limited retailer choice, disability, age-related barriers or digital exclusion.
“Competition and meaningful choice should be available to all consumers, not just those best able to navigate the market,” says Ms Lee.
Entrust is particularly concerned about consumers with limited electricity retailer options and those on prepay plans who may face higher costs, and a greater risk of disconnection.
“We welcome the Authority's work to better understand these issues and strengthen protections where needed, so that vulnerable and disadvantaged consumers aren’t unfairly treated,” says Ms Lee.
Electricity Authority data shows that in Auckland, despite being the largest city in the country, consumers with credit issues may only have choice between two electricity retailer options, even though there are numerous retailers. Across New Zealand, nearly 40 percent of households with credit issues may have only one retailer option.
This data also shows that prepay customers face significantly higher disconnection risk for non-payment and are 500 times more likely to be disconnected for non-payment than post-pay customers, says Ms Lee.
“Going without power is not like running out of credit or data on your phone. There are real and potentially severe real-world consequences.”
Entrust agrees with the Authority’s concerns that electricity is ‘fundamental to our daily lives’ and ‘enables people to participate fully in modern life’, and that some consumers may face serious consequences if they go without power – ‘for households with children, inadequate heating, lighting, hot water or refrigeration may affect health, sleep, study and everyday family routines’.
Entrust says that the Electricity Authority should consider minimum prepay safeguards, suitability checks before households are placed on prepay, and clear limits on forced prepay arrangements, drawing on United Kingdom protections for disadvantaged families.
“We have been fully supportive of the Authority’s work to mandate Consumer Care Obligations, but there aren’t enough safeguards around prepay arrangements. “As the Electricity Authority considers future reform, outcomes for disadvantaged households should be an important measure of success. Consumers experiencing hardship should not be more exposed to higher costs, reduced support, or disconnection risk.
“If the electricity market can deliver practical, usable and affordable choice for those consumers, it will be stronger for everyone,” says Ms Lee.