Consumer advocates and electricity retailers say new guidelines designed to protect customers from having their power cut off don't go far enough, and vulnerable consumers remain at risk.
Most electricity retailers agree new guidelines designed to protect customers should be mandatory (File image). Photo: 123rf
In May 2019, the government's Electricity Price Review found more than 100,000 households could not afford to heat their homes, the result of which was unhealthy and unacceptable living conditions that disproportionately affected children.
About 20,000 households are disconnected each year due to non-payment.
It recommended a number of measures to address energy hardship, one of which was setting mandatory minimum standards to protect vulnerable and medically dependent consumers.
"We consider the current voluntary arrangements do not provide vulnerable and medically dependent consumers with sufficient protection and should be replaced by a formal, consistent and enforceable set of standards," the final report said.
"Formal protection will become even more important as innovation in business models and technology leads to the emergence of new providers that may not give high priority to voluntary standards."
Consumer NZ chief executive Jon Duffy said the guidelines, which were set to be released next week, ignored that recommendation and it was not good enough.
"A number of reviews have indicated the regime is not protecting consumers ... electricity retailers are businesses, they are incentivised to make a profit and sometimes customer outcomes don't come before profits."
In a rare alliance, most electricity retailers agree the regime should be mandatory.
Meridian Energy chief customer officer Lisa Hannifin said while she would hope all retailers would be onboard, a voluntary code did not guarantee it.
"It's always best to make it really clear what the rules are and then it's really obvious for businesses to understand when they might be in breach of those rules. When it's voluntary, it's always a bit vague.
"And I'm not sure that naming and shaming people who haven't followed a voluntary set of guidelines will work."
Consumer advocates, retailers and distributors all supported a compulsory code.
However, Electricity Authority chief strategy officer James Tipping said it was not necessary.
"We're confident that retailer will continue to do the right thing by their most vulnerable consumers. Guidelines are one of our key tools for facilitating positive outcomes for consumers. They've worked well for us in the past and we've got every reason to expect this will continue to be the case."
He said work was underway to give the authority the legal clout it needed to turn the regime mandatory, but that would only be considered if the new set-up failed.
Meridian Energy's Lisa Hannifin questioned why the changes were coming in now, if making the guidelines mandatory later on, was still on the cards.
"What we'd really prefer is that we wait until they do have that ability and do the guidelines then rather than put something in place now that might change in a couple of years time.
"We think it would be better to do it once and to do it right."
Budgeting support service FinCap policy adviser Jake Lilley also thought the changes could have gone further.
"We'd really like to get to a future where we see no whānau disconnected and there's also an issue where every so often someone cannot get signed up to an electricity contract at all.
"And most of the time those [customers] are forced onto prepay."
He said those customers remained at risk.
"Really on prepay, still under these guidelines you don't have protection from disconnection. If you have an inability to pay you'll get your source of heating or your cooking facilities cut off.
"Which is really worrying and only going to compound the hardship issues."
Electricity Authority's James Tipping said under the new guidelines retailers would be expected to better monitor prepay disconnections and should be referring customers in hardship to a financial services providers.
Retailers who do not follow the guidelines face a name and shame punishment.
The guidelines would be released on 30 March and come into effect on 1 July.
Medically dependent customers who have told their retailer should never be disconnected.
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