Phase-out of low-user tariffs set to continue

Power companies will be entitled to hike the daily charge for the majority of their customers by a further 34½ cents per day from the start of next month, Energy Minister Simeon Brown has confirmed.

About 59% of household are on so-called “low users plans” that electricity firms have to offer as an option to customers and which have a daily charge that is currently capped by the Government at $1.03½ per day.

Electricity retailers will be allowed to raise that charge to $1.38 any time from April 1.

Former energy minister Megan Woods decided in 2021 to completely phase-out the requirement for power companies to offer low-user tariffs over five years, subject to a “mid-term review” of that policy.

That was after she accepted arguments that the requirement to offer the tariffs resulted in larger families who used more than the average amount of electricity paying more than their fair share of the fixed costs of electricity distribution infrastructure.

However, the phase-out has proved unpopular with people who benefit from the tariff plan, including people living alone and households that use gas for water heating or who generate their own solar power.

A Stuff reader poll in 2021 suggested about three-quarters of respondents were opposed to the phase-out.

Some consumers have complained they have seen their power bills rise steeply and unexpectedly after coming off fixed-term plans and having multiple annual increases in their daily charge kick in at once.

The Ministry of Business, Innovation and Employment (MBIE) had originally expected to provide its advice by the end of December on whether or not to continue with the phase-out.

But generation, infrastructure and policy manager, Tamara Linnhoff, said that review was put on hold when the new government was formed.