Merid­ian heeds calls on prompt pay­ment dis­counts

The Southland Times - - Business - Rob Stock

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 missed out on the dis­count be­cause they paid late.

A re­cent Sal­va­tion Army sur­vey of 1000 clients found 45 per cent had gone with­out home heat­ing in the pre­vi­ous year be­cause of the cost of power, and 10 per cent had used the oven or stove to heat the home dur­ing win­ter.

Prompt pay­ment dis­counts have been la­belled late pay­ment fees in dis­guise. DAVID WALKER/STUFF

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