Consumer says some households and businesses will face large increases to their electricity lines charges from next year, when the low fixed charge scheme is fully phased out.
The looming shift has led to the chair of the Electricity Authority, John Harbord, writing to lines companies about his concern some consumers could see unusually large increases in their bill.
This is because the scheme - which began in 2004 with customers on it paying 30 cents a day - has been phased out over the last five years, and has increased to now be a maximum of $1.80 per day.
From April 1 next year there will be no obligation on lines companies to stick to low fixed charges, and Consumer's head of Powerswitch, Paul Fuge, told Nine to Noon some could move to a charge as high as $4.70 per day.
"About 67% of households would qualify for a low user charge, and that's households that consume less than 8000 kilowatt hours of electricity in a year, or 9000 kilowatt hours if you live in the lower South Island... on average, the standard daily fixed charge is $2.70."
Fuge said there would be "winners and losers" from the change.
"Around 40% , we believe, will pay more, and that's based on [Ministry of Business, Innovation and Employment (MBIE)] analysis from the midpoint review. And so the households that are most affected in terms of who will pay the most more - lower-income, smaller households, and particularly elderly households will be the worst off. The ones who will probably do better are higher-earning, higher-consuming households who use more electricity."
One of the rationales for the change is to make it fairer for larger families, who would use more electricity than, for example, a single person or couple.
"When they brought in the low-user regulations, the idea was it would help lower-income households. But in reality, it's an inefficient way to target energy hardship. And that's because there's a lot of lower-income households that are actually quite high energy consumers. So it was seen as particularly ineffective.
"The reason that some low-income households can be high consumers is they can have large families. Their housing is generally poorer quality and they can afford less-efficient appliances.
"Conversely, there's some wealthy households who were benefiting from the low-user charges who happen to be low users because of better housing, more efficient appliances, and they may have low occupancy."
Fuge said as it was up to lines companies how they phased out the old system, there would potentially be 50 different approaches - but they should be revenue-neutral.
Fuge said if you were on the low-user charge of $1.80 per day, the average increase you might face was 90c a day, about $335 a year.
"What should happen is the variable price of your bill should come down accordingly - but it's unknown how that will work and if that will happen."
MBIE told RNZ the impact on the majority of households was expected to be small. Analysis had found around 85% of households would see an increase or decrease of no more than $9 a month, around $120 a year. However, the analysis also showed some very low electricity use households could see larger increases.
"Some of the people who are the worst affected by this are the people who can afford it the least," Fuge said.
"We've seen 20% increase in power prices over the last two years, so consumers are already struggling, particularly [the elderly]."
Electricity Authority chief executive Sarah Gillies said while some low-user households may face cost increases, they expected lines companies to "carefully consider the potential impact on these households".
Fuge said the result would be a postcode lottery of sorts - some will be in regions where lines companies move quickly, while others might do it gradually, easing any potential price shock.
"We don't think [the Electricity Authority is] doing a particularly good job on these things. I mean, they've had five years for the phase-out to sort this out, and we've left it to the very last minute... and so consumers are rightly concerned about what the impact will be on them."
The changes will kick in on April 1 next year.
"And we're coming down to the wire. I mean, lines companies will be working out their prices right now, advising retailers what the prices will be, and retailers will be advising price changes early next year to take effect from April 1. So it's very late in the piece to be sort of talking about this. We've had five years, and the regulator has really been asleep at the wheel here."
Tracy Kai, chief executive of Electricity Networks Aotearoa - which represents the lines companies - said there was a credit scheme available for struggling households which had been extended through to 2032, available via retailers.
