ERANZ is playing a leading role in the development of best practice approach to help the sector support its customers to manage their power bills, and keep their power on.
ERANZ members all recognise that some customers need help with their power bills, and that those who are vulnerable or medically dependent* may need extra assistance. The Electricity Authority’s (EA) has Guidelines to ensure customers are given support to manage their payments and are provided with information about how they can manage their energy needs or find assistance with their financial capability (find Guidelines here).
Since 2014 electricity retailers have been ensuring they meet best practice for the EA's Guidelines by reporting against Benchmarks. ERANZ members also undergo a compliance check against those Benchmarks every year, which are signed off by their Chief Executive. Since those Benchmarks were established, electricity retailers have been progressively improving their engagements with customers.
- The Voluntary Practice Benchmark for Electricity Retailer Credit Management are available here.
- The Voluntary Practice Benchmark for Electricity Retailer Management of Medically Dependent Consumers are available here.
- The compliance report against these benchmarks is available here.
In addition to this work, electricity retailers have been gathering statistics to measure the level of support they give customers, and to evaluate which measures are helping in managing payments. See here for the latest statistical reports.
ERANZ members are aware that many of the customers that struggle to pay their power bills have other financial challenges too, and that an holistic approach can have better outcomes. Given this, ERANZ and its members work closely with budgeting advisers (especially through the National Building Financial Capability Charitable Trust) and the Ministry of Social Development.
Keeping safe, warm and healthy
The ability to keep safe, warm and healthy in a home is an important and complicated issue. The provision of electricity to power a home for cooking, heating and bathing is an essential component to enable people to lead safe and healthy lives, but the ability to be able to do this is influenced by many factors.
The reasons why someone might struggle to pay their power bill are interlinked, and overlap with many general indicators of poverty and inequality. It could be because:
- their income is too low to meet all their expenses
- their home is of poor quality and is damp and draughty making it more expensive and difficult to adequately heat
- their heating appliances are inefficient, therefore making it more costly to heat a home
- they are not on the optimal pricing or plan from an electricity retailer
- a combination of all of the above.
ERANZ is committed to working with the Government and Stakeholders to address these challenges.
ERANZ believes that focusing on our housing stock and income levels to keep people warm, dry and healthy will deliver the best outcomes. People will then be able to get the most value from the electricity that is supplied into their homes. Financial assistance, like the Winter Energy Payment may help but it is not a complete fix. Rental properties need to be a particular focus because so many people are tenants of houses with poor insulation and inadequate heating arrangements. ERANZ and its members already play their part to help those who are dealing with energy hardship, and they see opportunity to work in further partnerships for better outcomes for their customers.
Not only do ERANZ members comply with the EA Guidelines to assist vulnerable and medically dependent customers, they:
- appoint dedicated hardship managers and customer-focused credit teams who are trained to assist customers with overdue debt, including working with those customers to understand their situation
- proactively engaging with budget advisers, Work and Income, and other government agencies, and service providers to find targeted support for customers
- regularly check whether customers are on the best plan for their annual consumption and needs
- empower credit staff to discuss alternatives to the standard monthly bill to make it easier to pay for power, for example smaller more frequent payments or to arrange to pay the same amount each month
- provide support for customers, especially medically dependent customers, during power outages, including supplies for emergency kits or offering to find alternative accommodation
- offer viable alternatives to post-pay in arrears arrangements that ensure costs are smaller and manageable and are more cost-effective methods of energy management.
See further analysis here
Disconnection is always a last resort
Disconnection is only ever used as a last resort. It always follows a lengthy process by a retailer to engage with their customer to understand their circumstances and work out an affordable payment plan. This includes referring customers to budgeting advisers, Work & Income, or other support services, if required. Disconnections are inconvenient, stressful, and costly to both the customer and the electricity retailer; therefore it is in everyone's best interests to do all that is possible to avoid them. Sometimes notice of the potential disconnection is the only way to make some customers engage and start to pay off an overdue amount.
The majority of those customers who are disconnected are reconnected within 24 to 72 hours. Some instances of disconnection that are captured in the statistics are also for properties that have become vacant without paying the final bill, as sometimes happens with shared accommodation.
*Vulnerability and Medical Dependence on electricity are defined in the EA’s Guidelines:
A vulnerable consumer is one who:
(a) for reasons of age, health or disability, the disconnection of electricity to that domestic consumer presents a clear threat to the health or wellbeing of that domestic consumer; and/or
(b) it is genuinely difficult for the domestic consumer to pay his or her electricity bills because of severe financial hardship.
A medically dependent consumer is one who is dependent on mains electricity for critical medical support, such that loss of electricity may result in loss of life or serious harm. For the avoidance of doubt, medical dependence on electricity could be for use of medical or other electrical equipment needed to support the treatment regime (e.g. a microwave to heat fluids for renal dialysis or equipment such as that listed in the Guideline).
Critical Medical Support is that which, in the opinion of a health practitioner with an appropriate scope of practice, is required to prevent loss of life or serious harm. This is usually provided by critical electrical medical equipment (CEME), which is any equipment supplied or prescribed by a health practitioner with an appropriate scope of practice, which requires mains electricity to provide critical medical support to a person, and includes other electrical equipment needed to support the treatment regime (e.g. a microwave to heat fluids for renal dialysis).