Why sticking with your current power provider could cost you hundreds more

Kiwis could save hundreds of dollars each year just by comparing power prices and switching to the cheapest provider, Powerswitch says.

Power bills typically surge during winter when appliances such as heat pumps, oil heaters and dryers are used more frequently. The average household spent $2121 and used 7223 kWh of electricity in the year to March 2021, up from $2067 in 2020, according to the Ministry of Business, Innovation and Employment (MBIE) electricity costs report. 

Based on information entered last winter into Powerswitch - a free and independent website run by Consumer NZ that helps Kiwis compare power companies and plans - the average person could've saved $388 by swapping to the cheapest available plan.

"The average saving that was available on our results page was $388 per year... it's across New Zealand [and] about $450 for the Waikato/Coromandel region," confirmed Paul Fuge, who manages Powerswitch.

But despite these potential savings, Fuge said only a small portion of power customers switch providers.

"There's a lot of inertia and apathy around it... a lot of people don't know they can switch or don't realise there's [potentially] a lot of savings," Fuge added.

Providers have different service models, structures and overheads. The five large providers - Mercury, Genesis, Meridian, Contact and Trustpower - have around 70 percent of the customers.

But if people are willing to compare prices and switch to the cheaper providers, it would put more pressure on the big guys, Fuge said.  It's the smaller providers - PowerShop, Electric Kiwi, Nova Energy and Todd Energy - that Powerswitch results show are the most cost-effective.

"The people appearing most on Powerswitch [at the top of the rankings] are the smaller ones - that's where the savings are," Fuge added.

But what's the downside of switching to a smaller provider?

Customers are advised to check whether they're locked into a contract with their existing power provider - and whether they charge a break fee for early cancellation.  

In many cases, to save money, customers need to be engaged with their provider - for example, going online and buying blocks of power.

And those on a limited income are advised to check the provider's billing process, as some require payment up-front or 'pay as you go' rather than being billed the following month.

"Most retailers you consume and after each month, get a bill for the previous month...for the most vulnerable, [this] locks out some of the cheaper offerings," Fuge added.

Tracey, a Raglan resident and former Genesis Energy customer, said her power bills over the five months to April averaged $116 (for one adult and one child). A higher February bill of $137.68 prompted her to jump online and compare prices.

"When I saw my February invoice, I thought, 'I need to start looking at power companies - I don't have heating (other than fire)'," Tracey said.

Her April bill of $93.94 included credits of $0.43 and $2.33 for two one-hour power shouts. The same month, she received an email from another power company, OurPower, welcoming her as a member of the community, saying it was unable to provide power at that time.

Having gone onto the Powerswitch website and browsed different providers' websites, she switched to OurPower in July.

It's early days, but based solely on her first weekly bill for July 30 to August 6 of $15.87, including a $0.52 admin fee, Tracey calculates she could save $47.23 per month compared to her average bill of $116 from December to April.

"They gave me a credit of $76.36 ($66.40 plus GST)...you think [switching] but it's no hassle at all - I just had to send an email," Tracey said.

Andy Doube, general manager of market policy at Electricity Authority, said a person's location, usage, current plan and how long since they last switched providers all affect how much money can be saved.

He encourages people to check regularly whether they're on the best plan for their needs.

"Consumer awareness and understanding of the ability to switch is an important aspect of a competitive market," Doube said.

Before switching, customers should check their contract with their existing provider first.

"Consumers should check the terms and conditions of their current contract and whether they will have to pay a break fee before they switch," Doube added.