Low-income people should pay less for power - poverty advocate

An anti-poverty advocate believes a power company can take its new credit system one step further.

Meridian Energy is scrapping its prompt payment discounts, which penalised people who didn't pay on time.

Ricardo Menendez-March from Auckland Action Against Poverty says it's a great start, but more can be done.

"When you're looking at neighbourhoods that have housing that lacks insulation where power will end up being more costly, perhaps there is a different pricing model for people on different incomes, to have something more equitable rather than equal."

Those who used to miss out on the discount will now save up to about $30 on every bill.

"No power company should be preying on low-income families that are unable to pay for their power by imposing penalties. It is a step in the right direction," said Mr Menendez-March

The change will start from October.

"This should be a sign for the Government there needs to be more subsidies across the board for people to have help paying for power."

The change will cost Meridian $5 million a year.