Monday, March 10, 2014

Mike Butler: Is prepaid power more expensive?

A claim from Labour’s Energy spokesperson David Shearer that power companies are unfairly targeting the poorest New Zealanders by charging them the highest electricity rates turns out to be untrue. Shearer wrote: "New figures obtained by Labour show those on pre-pay electricity plans - paying electricity bills in advance - pay up to 60 per cent more than those paying a regular power bill".

Therefore today, property owners throughout New Zealand would have fielded calls from distraught tenants demanding that the pre-power meter should be removed.

However, a phonecall to prepaid meter supplier Contact Energy revealed that not only was the claim that prepaid electricity was up to 60 percent more expensive than a monthly account not true, prepaid electricity was slightly cheaper.

Prepower in Hastings from Contact costs 30.989c/kw. There are no other charges. Twenty dollars will buy 64 units.

Monthly account electricity from Contact costs 21.579c/kw plus an electricity commission levy of 0.146c/kw plus a daily charge of $1.76.

A total of $140 would buy 448 units -- which would cost $152.49 on a monthly account.

The cost of removing a prepower meter is $150, and the cost of reinstallation is $150.

This means anyone panicked by Shearer's claims may spend good money to have a meter removed and end up spending more on electricity. Moreover, at the end of the tenancy the property owner would probably require that the meter be reinstalled.

It appears Shearer did his calculation without taking into consideration the daily lines charge that is included in a monthly power bill.


Angry Tory said...

Basic economics shows that prepaid meters move the risk of underpayment from the provider to the purchaser - which is reflected in a "discount for cash" just like many other businesses in capitalism.

Anonymous said...

I checked my Genesis Energy bill for February - 29 days, 703 units, $189 total incl GST)and discounted 10% for prompt payment. 703 prepaid units at 30.989cents is $217.9, which, assuming the 30.989 includes GST is, at the worst case, 15% higher. If I don't get the 10% for prompt payment it is about 5% higher.

paul scott said...

I have done some serious spreadsheets on the power prices.

1. Labour party are correct the increases in price since 2000 are 10% plus. Before the corporate model price increases were 5%
2. We used to be a low cost electricity market in the seventies.
3. We are not the top of the International price list for electricity, as suggested by Whale Oil, in a completely disingenuous graph.

Mike Butler said...

In the interests of accuracy I do have to note that Contact prepower prices jumped to 35.637 cents per kilowatt hour for Hastings in mid June of 2014. This means that $150 would pay for 420.9kw/h over eight days including GST. This would cost $125 (incl GST) on a monthly account, a saving of $25.