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Grey Power Urges MBIE Review To Reverse Phase Out Of Low-User Fixed Charges For Low-Income Households

Grey Power is pleased that MBIE is currently reviewing the phase-out of the low fixed charge regulations.

“While we acknowledge the reasoning for removing universal low-user fixed charges, Grey Power remains of the view that low-user fixed charges should remain for those people who are on low incomes, and struggling with the rising cost of living,” said Raymond Mudford, energy spokesperson for Grey Power.

“Grey Power said at the time of the 2019 Electricity Pricing Review that government should keep low-user fixed charges for those households earning less than $50,000 a year, and we stand by that recommendation.

Low fixed charges were 30 cents a day but are rising each year in a five-year phase out. Electricity retailers are currently allowed to charge $1.20 a day plus GST. We acknowledge that a few retailers have maintained a relatively low daily fixed-charge to date, but even these will rise to over $2 a day at the end of the five-year transition, an amount unaffordable for retirees on fixed incomes.

“It’s our view that the low-fixed charge of 30 cents a day should be retained for low-income homes using less-than-average consumption, which is under 7,200 kWh a year.

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Low-income New Zealand households who have low fixed-charge plans with their retailers will be driven into energy poverty if the excessive daily supply transition, heavily supported by lines companies and retailers, continues.

“It will mean more New Zealanders living in cold homes and having their power disconnected, which in turn impacts on our already under-funded public health system.”

Grey Power said that the MBIE-led review should look at California, where those enrolled in the California Alternate Rates for Energy (CARE) scheme pay only $US6 or $US12 a month in fixed charges, compared to the standard rate of $US24.15 a month.

Participants in CARE qualify by meeting income guidelines or enrolling in certain public assistance programmes. A household of one to two people which earns less than $US39,440 qualifies for the CARE discount.

Low fixed charges have also been trialled in Australia by Ausgrid and South Australia Power Networks but were not implemented due to “economic price purity”, a metaphor for user pays regardless of household income.

“Removing low-fixed charges also reduces incentives for energy efficiency, which was one of the primary reasons that low-fixed charges were introduced in 2004.

“The terms of reference for the review do not at any point mention energy efficiency, which is a major omission. High daily fixed charges remove any incentive to reduce power consumption through installing heat pumps, LED light bulbs and more efficient appliances.

“Electricity lines companies and retailers are now off the hook in promoting energy efficiency. Restoring low-fixed charges will ensure that those on low incomes are incentivised to invest in reducing their power consumption,” Mudford said.

The New Zealand Grey Power Federation (GPF) is a non-sectarian and non-party political, advocacy organisation that aims to advance, promote and protect the welfare and well-being of older people.

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