Implementing the Electricity Price Review recommendations

Background

The EPR was commissioned by the Minister of Energy and Resources in 2018. The review investigated retail power pricing in Aotearoa, to find out if it was fair and equitable for all. At the time, electricity pricing for residential customers had been increasing faster than inflation for years, putting pressure on household budgets across the country. In comparison, pricing for commercial and industrial electricity consumers had stayed relatively stable.

The findings of the review were published in 2019. It made a number of recommendations intended to:

• help ensure electricity pricing was fair and affordable for consumers, not just efficient or competitive
• future-proof the sector to ensure a smooth transition from the use of carbon-based fuels.

The government was supportive of most of the recommendations the EPR made, and endorsed the need for mandatory standards of protection for vulnerable consumers.

It's now been 4 years since the Electricity Price Review. We wanted to find out how well the recommendations have been implemented, particularly those that impact vulnerable electricity consumers. We commissioned Allen & Clarke to assess the implementation of key recommendations from the EPR.

The findings

The Allen & Clarke report highlights that there is still work to be done, particularly in areas where the most vulnerable consumers are affected. These consumers are still not receiving the protections the review promised. Many vulnerable consumers:

• struggle to pay their electricity bills
• are dependent on electrical medical devices, and
• are on prepay electricity plans.

There was a clear recommendation in the EPR that these consumers should be protected by rules that would ensure electricity retailers offer them help and support. To meet this recommendation, the Electricity Authority introduced the Consumer Care Guidelines. However, the guidelines are voluntary, not mandatory, and the Electricity Authority has found that retailers are not applying them consistently. 

The report also highlighted disappointing progress in 3 other important areas.

Prohibiting prompt payment discounts

Prompt payment discounts disproportionately hurt low-income consumers. They make it confusing to compare retailer pricing, and can be unrelated to the true cost of recovering an overdue bill. We have no evidence that all electricity retailers have stopped offering prompt payment discounts.

Improving consumer awareness of Utilities Disputes

Utilities Disputes resolves issues that arise between retailers and consumers. According to a 2022 Electricity Authority survey, only 12% of consumers had heard of them. Retailers need to better inform consumers about the service Utilities Disputes provides.

Bulk deals for social housing

Bulk deals for social housing let low income tenants share savings on their electricity bills. Many low income tenants face challenges paying their bill, and may be paying more than they should. However, these arrangements take time to set up and retailers have not been widely encouraging them as an option.

Next steps

In response to the report from Allen and Clarke, our Chair Deborah Hart said:

The Electricity Authority has agreed to consult on options to improve the Consumer Care Guidelines in September this year. We will be advocating for the guidelines to be turned into a set of enforceable, mandatory rules with proper oversight and penalties for non-compliance.

We will also continue to advocate for the other EPR recommendations to be implemented as intended, on behalf of small electricity consumers in Aotearoa.