16 Nov 2023

Electricity users who can pay helping those who cannot

5:51 pm on 16 November 2023
What does it take to encourage people to use less power?

What does it take to encourage people to use less power? Photo: 123RF

A social enterprise in Wellington is helping people pay their power bills.

But while experts welcome the move, they say regulation is needed to ensure fairness in the electricity market.

Toast Electric uses its profits to cut bills for households struggling to afford heating and hot water during winter.

The social enterprise, part of the Sustainability Trust, has been offering power in Wellington, Kapiti and Horowhenua for just over a year.

It uses its profits from full paying customers to support low-income households facing energy hardship

"In a country that's as rich as New Zealand, so many folks can't afford the electricity," said Sustainability Trust fair energy manager Phil Squire.

"It's a basic right, a basic resource that they need to keep warm, provide hot water for showers and washing, and just run basic appliances."

Squire said commercial retailers were making billions in profit.

The not-for-profit supplier had just over 500 customers, with around 100 of those on its energy wellbeing programme, getting support such as having their winter energy bills capped at what they can afford.

Squire said one of the advantages of their model was that as a local provider, they were able to provide personalised solutions. That included a free home energy check, particularly for low-income households, which Squire said had led them to identify issues such as leaky hot water cylinders, broken heating systems, and uninsulated homes.

They were also able to offer solutions to bring down heating costs, such as adding curtains.

Energy wellbeing customer Vanessa Thomas suffered from chronic pain and was home most of the time. She said Toast Electric had been a game-changer for her.

"In the winter time, without hesitation, I've been able to run the heat pump, so this has been the first winter where our house has actually been lovely and warm and dry."

Thomas said she has also been able to have hot showers and baths for pain relief and use the dryer for wet clothes.

Peter Davis meanwhile was a full-paying, or general income, customer. He said switching to the social enterprise model was a "no-brainer."

"I was just going to be effectively paying the same amount and there would be a social benefit from doing so, cause somebody else will be getting some cheaper power if they're kind of in a situation where they can't pay their bills."

A right to fair-priced power

FinCap senior policy advisor Jake Lilley said while social enterprises could help address energy hardship, they were not a silver bullet. He said financial mentors often reported struggling to get people connected to power because of a bad credit rating.

"So we really need a right to access power and that needs to be from any provider."

Lilley said they also saw people under threat of disconnection going without food in order to keep the lights on, or living in freezing homes and getting sick because they could not afford heating.

He said there needed to be more proactive assistance from all electricity providers.

An anti-competitive market

Energy markets expert Geoff Bertram said the price of electricity was a huge squeeze on households across New Zealand.

The current electricity market, he said, had "an entrenched monopoly system" that created an intensely anti-competitive environment.

Bertram said that social enterprises could be part of solving energy hardship, but they could not solve the heart of the problem.

"The social enterprise sector is really putting band-aids on some of the injuries caused by the electricity industry structure, but not in a position to make a big dent in the structure itself."

"What's really needed to solve the problem of energy poverty across New Zealand is to seriously address the problems with the market as it has been set up."

Bertram said the big energy retailers needed to be split up, allowing more competition. But he said ordinary consumers also needed to be given much more scope to develop their own sources of supply.

"That means rooftop solar, community level batteries and small wind farms," he said. "Technologies which are now competitive for producing electricity very much at the local level without having to rely on the big central generators and the grid."

He also wanted to see legacy hydro assets renationalised, "which could be providing a battery to support rooftop solar and small wind rather than being used for profit".

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