New Zealand

Vulnerability that becomes disadvantageous due to high fixed electricity charges

Vulnerability that becomes disadvantageous due to high fixed electricity charges

Consumer NZ states that changes in household electricity prices can be most detrimental to vulnerable households, while higher users may benefit.

Energy Minister Megan Woods has accepted the 2019 recommendation from a electricity price review that utilities will phase out the requirement to offer “low fixed rate” electricity rates.

As a result of the change, utilities will be able to collect additional hundreds of millions of dollars annually at fixed rates.

Electricity charges for all households include fixed and variable charges per day.

Fixed costs cover costs such as meter reading and line company charges. Variable charges are the unit cost of kilowatt-hours (kWh) of electricity consumed by households.

Households that use below average electricity will be given the option of paying a low fixed daily rate of 30 cents per day from their utility, but the electricity rate will be higher.

Low fixed rates are designed to appeal to consumers who use less than average electricity.

They cap a fixed daily rate that their customers pay for electricity at 30c per day, with the exception of GST.

However, Woods has announced that the cap will increase by 30c each year from April 2022 to April 2026. The cap will be completely removed from April 2027.

Paul Fuge, manager of ConsumerNZ’s price comparison site Powerswitch, said customers who didn’t choose low rates paid a fixed rate of about $ 3 to $ 4 per day, but less per unit of electricity. Stated.

Introduced in 2004, the Low Fixed Cost (LFC) tariff option for domestic customers has reduced fixed costs for low electricity usage to 30 cents per day.

Fuge said that about 40% of low-income household customers, such as pensioners living alone or with partners, use LFC.

Fuge said removing the LFC would result in winners and losers. Consumer NZ was concerned that it could have the greatest impact on low-income households.

“Changes in electricity prices can be disproportionately detrimental to the most vulnerable households.”

He said large households that use a lot of electricity would benefit most. Small homes that use a small amount of electricity are most affected.

“Some households will definitely benefit, and some will enjoy the opposite.”

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Vulnerability that becomes disadvantageous due to high fixed electricity charges

Source link Vulnerability that becomes disadvantageous due to high fixed electricity charges

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