Electricity Disconnection Fees “Unclear, Unkind And Unreasonable”, New Report Shows

New research into electricity disconnection fees has found huge variation in what power companies are charging, and a lack of information about how fees relate to their actual costs.

The research investigated 33 electricity companies’ disconnection and reconnection fees in cases of unpaid bills. The investigation was led by Common Grace Aotearoa, an organisation that equips Christians to advocate on economic justice and other issues.

“Last year, 40,000 households had their electricity cut off because they couldn’t afford to pay their bills.(1) At this moment of hardship, power companies are allowed to charge them a disconnection fee, then an additional fee to reconnect their power,” said Kate Day, Co-Director of Common Grace Aotearoa.

“We know that these fees are causing harm and pushing people further into debt. One family spent an extra week without power during winter while the grandmother scrambled together the fees to get the power turned back on. Even the threat of these fees adds significant stress to people who are struggling.

“We therefore investigated whether these fees are ‘reasonable’ as required under the Consumer Care Guidelines.

“We found huge variation in what companies charge. Two companies - Toast Electric and Nau Mai Rā - choose not to charge disconnection fees at all.”

Phil Squire from Toast Electric told us: “I can’t see the justification for charging these fees to households already struggling with the cost of power. There are certainly costs to disconnection and reconnection, and theoretically if these costs are not charged they will be socialised across the whole customer base. But I think we’re all a bit tired of add-on fees all over the place, and the optics of hitting low-income households with extra costs.”

Among the remaining companies, when no site visits were required, fees ranged from $0 to $235 for the total of disconnection and reconnection. For example:

Pulse and Pioneer charge $95 for disconnection, $75 for reconnection (total $170)

Slingshot, Orcon and 2degrees charge $90 for disconnection, $70 for reconnection (total $160)

Frank Energy charges $29 for disconnection, $105 for reconnection (total $134).

Powershop charges $0 for disconnection but $90 for reconnection (total $90).

“We considered these fees very high for a digital process that can be done in a short time,” said Kate Day.

“We were also surprised at the variation, given that fees are required to reflect actual costs (Consumer Care Guidelines para 109).”

When site visits are required (in cases where customers do not have a smart-meter connected to an internet connection), companies charge between $0 and $300 for the total of disconnection and reconnection. For example:

Frank Energy $192 + $105 = $297

Ecotricity $138+$138 = $276

Contact $110 + $150 = $260

Meridian $125 + $125 = $250

Flick $110 + $110 = $220

In ‘worst case scenarios’, where site visits and after-hours reconnections are required, fees totalled up to $417 (Genesis and Frank Energy).

“These fees are very high for a household that is already unable to afford their electricity. Many people on low incomes are renters and therefore unable to install a smart-meter, so it seems unfair that they bear the cost of higher manual fees,” Day said.

Another finding was a lack of transparency. “When we asked companies to explain their fees by breaking them down into components for us, only three companies did. We therefore cannot determine whether fees reflect actual costs, and therefore whether they are ‘reasonable’.”

“Given the stories of hardship we have heard, we consider that fees that only affect households who cannot afford electricity are inherently unreasonable.

“Several companies told us they waive fees for customers in hardship who are engaging with them, which reinforces that companies can choose not to charge these fees. We ask those companies to stop charging these fees to anyone facing disconnection for unpaid bills. Not all customers can engage with their power company when under high stress, and facing disconnection is sufficient indication that a household needs extra care.

“We call on the Electricity Authority to ban these unclear, unkind and unreasonable fees as soon as possible.

“In the meantime we call on companies to do the right thing and stop charging these fees. They are causing harm by pushing people further into debt. The threat of these fees - even if eventually waived - is adding stress to people at a difficult time.”

© Scoop Media