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a neutral toned background with powerpoles, grey sky, and some red and blue abstract shapes, looks quite sad
The people paying more for electricity are often those who can least afford it (Image: Archi Banal)

SocietyJuly 28, 2023

Why are New Zealand’s poorest punished for not being able to afford power?

a neutral toned background with powerpoles, grey sky, and some red and blue abstract shapes, looks quite sad
The people paying more for electricity are often those who can least afford it (Image: Archi Banal)

New Zealanders living in poverty often end up paying more for their electricity. A new campaign says it’s time for that to change. 

“I would set a timer for an hour and go and sit downstairs. When the timer went off, I had to go back to bed; it was the only place warm enough for me.” Debbie Leyland, a community advocate and beneficiary is speaking in a church on Willis Street in Wellington, dark wood panels behind her as she describes what her home was like when she was recovering from cancer last year. She’s part of a team launching a campaign for fairer electricity policy in New Zealand. 

The campaign, called Everyone Connected, is calling on the Electricity Authority to make three changes to increase energy equity for vulnerable New Zealanders. First, it asks that electricity companies be required to absorb disconnection and reconnection fees for people who can’t pay bills; some companies do this already. Second, it asks that people on prepaid power plans, usually those who have struggled with bill payments in the past, pay the same amount as those on postpaid fees for equivalent usage. Third, it asks that the Consumer Care Guidelines, developed with input from electricity retailers in 2021, become mandatory and enforceable.

For Leyland, changing electricity payments is personal; energy poverty is something that she and her community are deeply affected by. “Where I live in Lyall Bay, most of the people on my street are beneficiaries – everyone gets depressed in winter because we’re so cold,” Leyland tells me, describing how just last week she delivered a hot water bottle to a neighbour who couldn’t afford to turn a heater on. 

an older pakeha woman wearing a sharply tailored black suit with wood panels behind her
Debbie Leyland has lived with energy poverty, and knows how much it hurts (Image: Supplied)

The disconnection fees are particularly galling. Several years ago, Leyland had her electricity disconnected when she couldn’t afford to pay a bill. It was the middle of winter and “horrible”, she describes. On top of other financial stressors, she was charged a disconnection fee, and a reconnection fee a few weeks later when she scraped together the money to find a new electricity provider.

Altogether, not being able to pay her electricity bill cost her nearly $200. Because she’d failed to pay the bill on her own, MSD paid it for her, subtracting it from her benefit. “I think it’s really immoral to cut people’s power off because they’re poor, because it’s a basic right,” Leyland says. “How much money are electricity companies making from people on benefits? For me, $60 a week [subtracted from the benefit] is a hell of a lot of money.” 

Disconnection fees “kick the poorest households in New Zealand into further hardship,” says Kate Day, another campaigner. The campaign’s demands are “low hanging fruit that could make a difference to thousands of households”. At least 8,000 households were disconnected from electricity because they couldn’t pay bills last year. 

However, these 8,000 households are not the only ones getting disconnected. People on prepaid power plans, who pay for a certain number of kWh upfront, can lose power when their credit runs out, remaining without electricity until they top out their accounts. Retailers aren’t required to report disconnections to prepay customers. Mercury told Newsroom last year that an average of 2.6% of its 21,000 prepay customers were disconnected each day. 

a woman with short brown hair and a blue jumper standing next to a man wit rumpled brown hair and a bron jumper with a stachel over his shoulder, looking in slightly different directions, like the photographer grbbed them for the picture and they were a little bit surprised
Kimberley O’Sullivan (left) and Jake Lilley (right) discussed the health and financial impacts of current electricity retail settings respectively (Image: Supplied)

Lack of access to electricity can have wide reaching health impacts, says Kimberley O’Sullivan, a researcher at Otago University’s Centre for Sustainable Cities who studies energy poverty. There are some more obvious effects: “the respiratory and circulatory system – COPD, coughing, asthma, wheezing,” she says. Not having access to electric heating can exacerbate pain conditions, too. Elderly people, and babies and small children who cannot regulate their body temperatures as easily, are particularly vulnerable. 

The inability to pay electricity bills is also associated with poor mental health, O’Sullivan says, citing longitudinal research from the UK. Because electricity poverty is so intertwined with other causes of stress and hardship, it can be hard to untangle causation, but stories of mental stress around paying the bills is something O’Sullivan has heard repeatedly in her research. People who spend a lot of time at home because of disabilities or mental health issues end up using more electricity, and can’t take advantage of free, warm spaces like public libraries – something that was obvious through Covid lockdowns, when everyone had to stay home. Risk factors overlap. “People living in poor quality rental accommodation, houses that are harder to heat, and experiencing income poverty are especially vulnerable.” 

In winter, when it’s colder and there’s less light, electricity struggles become pronounced. “You may have families crowding into the living room since it’s the only room they can afford to heat, which can create tension,” O’Sullivan says. Not having electricity also impacts children’s educational outcomes, since reading and studying is more difficult. “There are lifelong consequences – but there’s no need for disconnection to cause this much hardship,” she says. “You could alleviate a lot of these experiences with some simple changes.”

A woman looking tiredly at a letter bill looking exhausted with a cup of tea
Energy poverty can be particularly detrimental to children and older people who are more impacted by the cold (Getty Images)

Changes to prepay electricity plans are one of the simple solutions that O’Sullivan endorses. The number of households using prepay power is relatively small, says Sarah Gilles, chief executive at the Electricity Authority – approximately 30,000 households. The Authority is considering improvements into how retail data is gathered to monitor consumer outcomes, which may include more information about prepay customers. 

Research from Consumer NZ, another supporter of the campaign, released last month estimates that 50 households on prepay power go without electricity each night. In addition to that, prepay power is more expensive – about 11% and 15% more in Auckland, and as much as 17% in Christchurch. Prepaid customers may be asked to pay additional fees, and are excluded from time-sensitive pricing which offers savings. “People in difficult situations have no choice except to prepay – we have people walking into financial mentors’ offices in crisis, and extra fees make things worse and worse,” said FinCap’s senior policy advisor Jake Lilley at the campaign launch. “We all deserve to have warm homes – and warm showers and kai in those homes.” 

The electricity industry has Consumer Care guidelines, which include requirements to allow customers reasonable time to receive financial assistance from authorities without incurring a penalty and requires customers to agree before they are referred to social agencies for delayed payment. But adherence is limited, acknowledges the Electricity Authority; a review earlier this year found that less than half of retailers were complying.

“[The review] gave us cause for concern,” Gillies says. The authority will conduct a round of consultation in September which may include making the guidelines mandatory. The guidelines were developed before the Electricity Industry Amendment Act 2022, which states that one of the objectives of the Electricity Authority is to protect the interests of domestic and small-scale consumers. 

The authority welcomed the Everyone Connected campaign to provide input into the review of the guidelines. “We are conscious of the need to balance making quick changes with avoiding unintended consequences for consumers that could inadvertently make them worse off.” 

“It makes me so sad when I look at the research, because there are thousands of people living in this situation,” Leyland says. “I’ve had days where I’ve had to decide: do I eat today, or do I pay for power? Why do I have to live like that?”

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