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Cheaper electricity bills from new regulation

Cheaper electricity bills from new regulation

Low power users are now saving between $25 and $96 a year on their electricity bills because of regulations introduced by the government that require companies to offer low fixed charge tariffs, Energy Minister Trevor Mallard said today.

"This policy is designed to help low power users and low income earners, including pensioners, to save on their power bills, and it's working," Trevor Mallard said.

"The regulation came into force last October, and now over 30 percent of domestic consumers are enjoying lower electricity bills which is great news.

"I would urge people who don’t use much electricity, to check out whether they can save money by switching to this option. Retailers are required by law to offer it to all domestic customers in their primary place of residence.

"Customers can easily check their plan options on www.powerswitch.co.nz, or simply phone their power company or other power companies operating in their area to discuss whether they would be eligible.

"Savings vary from region to region and depend on consumption levels, but customers on low fixed charge tariff options can expect to save an average of $25 to $96 per year. For example, a customer using 6,000kWh per year in the Thames Valley region could save $88. (see attached list for savings per retailer and region)

"Under the regulation, the low fixed charge option must have a fixed daily charge of no more than 30 cents per day (excluding GST, after the deduction of prompt payment discount). The low fixed charge tariff option must also be cheaper for a consumer using less than 8,000kWh per year compared to the similar standard tariff option.

Background: The low fixed charge policy used to be voluntary but overall compliance was less than 50 percent. So the government introduced the Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations 2004 on 1 October 2004 to make compliance compulsory.

Compliance is monitored and enforced by the Electricity Commission. A recent survey by the Ministry of Economic Development shows compliance is 97 per cent for lines companies and 94 per cent for retailers. Most non-compliance is of a minor nature, and is being followed up.

Some retailers are exempt from the regulation, such as homes on “closed” tariff options or retailers operating in certain areas (such as the remote areas in the Marlborough Sounds).

See chart here.

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