Daily cap on power prices to rise again next month
- silvereyecomms
- Mar 25
- 3 min read
Updated: Aug 21
The Post
Daily cap on power prices to rise again next month
Tom Pullar-Strecker
March 24, 2025
Power firms will be able to raise their daily charges for most households by
about $10 a month, from next month, after a limited government review of
pricing rules.
The former government agreed in 2021 to gradually phase out a cap on
fixed daily power charges originally championed by the Green Party that
benefits about 60% of households that use relatively small amounts of
electricity.
The so-called ‘low fixed tariff’ cap has quadrupled to $1.38 a day over the
past three years and is due to rise by a further 34.5 cents on April 1, and
another 34.5c next April, before being removed entirely.
A Stuff reader poll in 2021 indicated the phase-out of the low-user tariffs
was unpopular, with about three-quarters of respondents opposed.
Consumer NZ Powerswitch manager Paul Fuge noted the former
government’s expectation was that the phase-out would be “price neutral”
for customers overall.
Its assumption had been that the increases in daily charges would be
matched by reductions in other electricity charges, but Fuge said it was
hard to unpick overall pricing to tell if that had been the case.
The argument of power firms was essentially that other components of
households’ power bills would have risen faster than they had, were it not
for the phase-out, which was a claim that was difficult to test, he said.
Ecobulb managing director Chris Mardon says one downside of the phase-out is that it reduces the incentives for electricity conservation.
Consumer NZ got a lot of calls to its call centre every April about the phase-
out of the low-user tariffs, Fuge said.
“It does annoy people.”
The former government agreed the phase-out should be subject to a “mid-
term review” in 2023.
That was in part to attempt to check whether power companies were
passing on the benefit they got from increased daily charges to consumers
in the form of lower variable power charges.
The review has been completed by the Ministry of Business, Innovation and
Employment (MBIE) but has not yet been released by Energy Minister
Simon Watts.
However, MBIE has clarified that recommending a halt to the phase-out
had never been on the table, regardless of the review’s findings.
Instead, the only purposes of the mid-term review were to see how prices
had changed and check whether the goals of the policy were being met,
and whether additional support measures might be needed to mitigate the
impact on some consumers.
Jessica Wilson, a former member of the Consumer Advocacy Council, said
the limited scope of the review was disappointing but not surprising.
The advocacy council was set up by the former government to lobby for
the interests of consumers and small businesses in the power market, but
was disbanded by the Government last year in a cost-cutting move.
The phase-out of the price caps should not have been allowed to continue
until there had been a good evidence-based review of its impact, Wilson
said.
Chris Mardon, chief executive of Ecobulb, said there were winners and
losers from the phase-out of the price caps, with one downside being that it
reduced people’s incentives to conserve power or invest in technologies
such as home solar.
“My concern is that we're going to end up with potentially the worst of both
worlds, where the daily fixed charge goes up, but the intention of the
variable charge coming down doesn't happen as much.
“It'd be nice to see some of the revenue used to actually provide
programmes for energy efficiency,” he said.
Wilson said a wider look into consumer protections in the power industry
was warranted.
The Electricity Authority was “finally” making its consumer care guidelines
mandatory, but those guidelines were not sufficient and contained
significant gaps, she said.
Those gaps included insufficient protections for households in hardship
and on pre-pay plans, too narrow a definition of medically dependent
consumers, and too few obligations on power firms to make sure customers
were on the best plans, she said.
The latter meant many consumers were paying more than they should,
Wilson said.
“The gaps are there at a time when we're seeing power prices continue to
increase, and projected to increase quite substantially this year.”
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