How to Lower Your Power Bills in 2022

"I say in a recent Stuff.co.nz column that electricity comparisons can be complicated. Many MoneyHub users have asked us about what electricity provider is the cheapest. The answer isn’t simple – it depends on where you live and whether you’re a low user or a standard user. But even then, there’s a lot of ways the industry makes it near-impossible to compare like for like".

"The fastest way to save money is (unsurprisingly) to use less electricity. The second fastest way is to switch providers. I comfortably argue that hundreds of thousands of New Zealanders pay too much for the electricity. Power companies don’t make understanding their prices easy which keeps their customers 'profitable'. However, the more you know, the more you can save".

"We believe switching will help you save and, no pun intended, give you the power and confidence to control how much you spend. It's a fact that many New Zealanders who have overpaid, found a better offer and notified their long-standing retailer they will switch, only to be offered huge ongoing discounts to keep them as a customer. We don't think that's fair either, but, again, the more informed you are the more power you have".

Despite a lack of competition in the market, there appears to be no way back from annual power price increases. A lack of government oversight doesn’t help either – we believe consumers need to, now more than ever, compare and switch to avoid overpaying.
 
A government report in late 2018 showed that everyday New Zealand consumers faced significant increases in power costs since 1990, with (inflation-adjusted) residential prices rising 79 per cent, while commercial prices had dropped 24 per cent. Currently, there is something of a two-tier residential electricity market – those who compare and switch save money, and those who remain loyal where many end up paying higher prices.

We believe access to affordable power is a basic consumer right but, sadly, the costs are high. Most affected are low-income consumers and the elderly, which is unfair. In a report from Consumer NZ in late 2018, 20% of consumers had trouble paying for their power bill in the past year, 14 per cent were charged overdue fees and 13 per cent had to borrow to pay it.
 
A Consumer NZ study reported that in 2017, 25,317 people had their power disconnected because of unpaid bills, up from 19,106 (or 33%) in 2016.
 
Our view is that the electricity market needs to be regulated – the costs of generating power and distributing it are not increasing at the same rate of the power price hikes. Until there is government policy, we strongly suggest comparing and switching to save money. The BIG savings ONLY come from switching. 

We believe that while a number of power comparison websites exist, there are limitations. Some comparison websites, by default, only show you plans you can switch to via them – this means they are paid commission. This, unfortunately, removes some results, or in other cases highlights the ‘sponsored’ power companies at the top of the results. Our comparison results show ALL power companies in the order of total annual cost for our sample power use.
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Our Tip: If you do use an electricity comparison website, be sure to select the option to show ‘all available plans’, if this option does exist, before making any decision. It is also important to cross-check the quotes you get with the power companies directly to ensure accuracy.

​It’s important to know that each electricity retailer has a range of plans which have their own pricing, early payment discount, sign-up credits and ongoing discounts. You may switch to the ‘cheapest’ retailer, but unless you are on the right plan, you may overpay. Only three factors really matter:

1. The daily charge
2. The kWh unit charge
3. The discount amount (if offered)

MoneyHub reader John writes:
"I did a price comparison and found that switching would save us around $450 a year, primarily due to the lower kWh charge. I contacted my existing power company who did everything they could not to lose me. I copy this, word for word, on what I was offered:

• To change your pricing to a Low User Plan. This would save you $16.37 on your last account with the new rates of 27.14 cents per kWh for your All Inclusive Meter and a Daily Fixed Charge of 35.29 cents per day.
• A Friends Extra 5% discount off the unit price per month.
• A $100 credit on your account for a 12-month term. If you decided to switch providers, we will ask you to return the $100 plus $55 for reticulated gas (if applicable).

I was very annoyed that all of these discounts were suddenly available, and challenged them why I wasn’t moved to a ‘Low User Plan’ in the first place. The answer was that my monthly bills would have suggested I switch, but there was no mention of this at all. When I told them, their employee said it was something ‘they could improve’ on the bills. It was all very fishy, and I am pleased to have switched to a company which is cheaper, although I am wondering what offers I would receive if I threaten to leave them!"

Power companies like to be paid on time, and historically have offered a range of incentives for ‘early payment’. The practice has been criticised as contributing to unfairly penalising ‘poor’ customers while households with spare money can take advantage of the discount. MoneyHub is featured in this Stuff.co.nz article about prompt payment discounts (PPD), which have largely been discontinued.

Most electricity companies will perform a credit check – this is to protect them from customers who run up a bill and fail to pay. If you are concerned about your credit history and want to make sure everything is in order, our guide to credit scores and credit checks has everything you need to know.
 
Important – payment history data from electrical bills are shared with crediting agencies by electricity retailers so it’s essential not to neglect these bills. A missed or late electrical bill could affect a mortgage application or personal loan application later on. If you're young and building credit, please keep this in mind.

You can switch retailers and save money, and then save even more money by changing your behaviour with some simple easy-to-do thing.

1. Turn down the heat and put on a jersey
2. Turn off the lights when you leave a room
3. Use energy-saving low-watt light bulbs - they're dropping in price (relative to what they once cost and offer long-term savings).
   
4. Don’t leave electrical goods on standby – this includes turning off computers and home entertainment at the wall after use.
5. Switch to energy efficient devices – LED lights, the next time you buy a fridge/washing machine, etc. consider its energy rating.

If you’ve moved into a new property or are just switching existing providers, it’s easy to get an electricity reading (if it doesn't have a smart meter).
  
MoneyHub user Matt writes:
"I connected our student flat without doing an initial meter reading. We got some ‘adjustment’ a couple of months later for $300. I didn’t understand as it was summer in Dunedin and if anything our power had been low. The electricity company told me when they did a reading they charged us for everything since the last person to live in the flat’s bill. I told them that has nothing to do with us and it’s unfair given we had just moved but, but the law was on their side. We had to pay. The lesson is to ALWAYS get an initial reading done when you sign up for a power contract. This means you start effectively at zero and only pay for what you use, and not a previous tenant’s power".

If you don’t have a smart meter, do a meter reading every time you get a bill. Electricity company estimates are often completely inaccurate. Reading your meter isn’t difficult or scary – it’s just one number after all - the kWh consumption. By not regularly reading your meter, you are either being:

1. Underbilled (which means you’re using more electricity than the electricity company believes you are using, and will have an adjustment to pay later on) or
2. Overbilled (which means you are using less electricity than the company’s estimate, meaning you are overpaying and could save money every month as a result).

 
Know This: Smart meters help stop this as they send meter readings automatically to your supplier, so you only pay for what you use.