Meridian heeds calls on prompt payment discounts

Meridian Energy is to stop penalising poor people who struggle to pay their bills on time by ditching its ‘‘prompt payment’’ discounts.

Prompt payment discounts have been criticised as disguised late payment fees penalising lower-income households.

A crescendo of calls to ban the practice began following the first report of the Electricity Price Review on Wednesday, which focused on rising energy poverty. The discounts are typically 10 to 20 per cent of the bill, but can be as much as 26 per cent.

Meridian’s chief executive Neal Barclay has now acknowledged they are unfair on the poor, and the company will cease using them from October 1.

Instead, it will give everyone ‘‘guaranteed discounts’’.

Most middle and high income households get prompt payment discounts, but many lowerincome families miss out and pay a high price for power.

The publication of the report prompted growling pressure for prompt payment discounts to be banned, or regulated, echoing similar calls in Australia.

‘‘They should be completely eliminated,’’ said Rebecca Reed from Flick Electric, one of the new generation of challenger electricity retailers trying to win market share from the big power retailers.

‘‘They are completely misleading. They are not prompt payment discounts. They are late payment penalty fees.’’

Luke Blincoe from Electric Kiwi, another of the challenger power retailers agreed.

‘‘They are absolutely just late payment fees disguised as discounts.’’

When physical retailers artificially inflated prices, and then pretended to be discounting them, they would be fined, he said. ‘‘That doesn’t happen in our industry.’’

The discounts were introduced with good intentions, but over time they had come to disadvantage struggling customers.

A Consumer NZ survey found more than a quarter of households with incomes of less than $50,000 a year reported missing out on prompt payment discounts because they paid late.