Electric Kiwi | Blog | Most Kiwis disagree with Consumer NZ’s approach to Powerswitch

Most Kiwis disagree with Consumer NZ’s approach to Powerswitch

Latest News13th Sep 2022

The majority of Kiwis disagree with how Consumer NZ is running Powerswitch – and we think it’s time the supposed voice of consumers starts to listen.

After seeing our energy plans removed from Powerswitch because we refuse to pay the unfair tax that Consumer puts on good value plans, we decided to gauge the opinion of about 1,000 Kiwis to see whether or not we’re in tune with what consumers would expect from the government-backed comparison service.

It turns out that most people agree with us that Consumer NZ's current approach to generating funds from energy retailers is unreasonable because it sees the cheapest retailers in the market saddled with the greatest financial burden, while the biggest retailers charging customers higher prices get away with tiny contributions.

The survey findings also show support for Electric Kiwi’s view that Consumer NZ should be doing more to highlight the benefits of innovative energy plans designed to incentivise load shifting to support the green transition.

Consumer NZ may try to dismiss these findings because they highlight where they are going wrong, but to do so would be to dismiss what normal Kiwis think.

We’ve been trying to help Consumer NZ understand where they can and should be improving Powerswitch to the benefit of consumers for some time, but these discussions have broken down and eventually led to our plans being removed from the site altogether. We’ve frequently asked them to consider our suggestions for alternative funding solutions, but we’ve been completely dismissed at every turn.

Consumer NZ’s refusal to take our concerns seriously has resulted in the ridiculous situation of this publicly funded service not showing consumers all plans in market.

That’s why we wanted to ask Kiwis what they expect from Powerswitch, and hope Consumer NZ listens to their feedback. That starts with restoring our plans on Powerswitch as soon as possible. If not, we hope the Electricity Authority takes notice and considers whether Consumer is the right party to be running this vital service. Given that Consumer was awarded the contract without a contestable process, we wonder if New Zealanders are getting the best value and service.

What did the survey find?

More than half of Kiwis (51%) who responded to the survey¹ said they have used Powerswitch to compare energy plans in the last 12 months. But whether they use the website or not, a whopping 96% of consumers agree that all retailers should be present on Powerswitch.

However, there’s a lack of understanding about how the website is funded, with just 40% of respondents aware that Consumer NZ receives money from the EA to run Powerswitch. And only 33% said they were aware that energy retailers contribute to the funding.

Consumers have recently made it clear that 75% of funding comes from the EA and retailers account for the final 25%. Our issue is that data from Consumer confirms that the few retailers with the best prices attract nearly 60% of the retailer levy. Recent data provided to us by Consumer showed that in June 2022, the top three retailers accounted for 58% of switches, and paid up to $155,600 in fees, while Meridian – state owned and NZ’s largest (by capitalisation) energy company – contributed at most $1,200!

What do Kiwis think?

When respondents were asked what they think the fairest way of recovering costs from the energy retailers would be, the survey found that:

36% think fees should be determined by market share, so the biggest retailers with the most customers contribute more than the smaller retailers.
26% think all retailers should pay an equal fee for appearing on Powerswitch.
20% agree with Consumer NZ that energy retailers should pay a fee for every customer who switches through Powerswitch, so the retailers with the cheapest prices make the greatest contribution.
17% said none of the above, or not sure.

We agree! Why should the cheapest retailers be saddled with the majority of the retailer-generated funding for Powerswitch, while the big guys with higher prices contribute so little?

What the current funding model does, is make it harder for retailers to bring good prices to market because they’re hit with a value tax in the hundreds of thousands of dollars a year.

Other retailers agree

Since conducting our survey of consumers, we’ve also discovered that other retailers are largely in agreement with us regarding Powerswitch, too. That’s because Consumer NZ conducted a survey of retailers to gauge concerns with the funding model and also to suggest alternatives. We contributed to this.

The survey found that a majority of retailers (67%) have concerns with the current funding model, while 75% would rather the switching fees are removed, and the EA provides all of the funding.

It should be noted, however, that only 12 of the 45 industry stakeholders who were invited to complete the survey actually did so, which in itself is a sorry reflection of the current situation.

How load shifting plans are represented on Powerswitch

Electric Kiwi’s concerns about Consumer NZ’s running of Powerswitch extends to how time of use energy plans are represented. They have embraced a standardised, one-size-fits-all approach to the assumptions used to determine the annual costs displayed for plans that promote load shifting with cheaper off-peak rates, rather than making an effort to highlight the real-world savings that can be achieved with such products.

Incentivising behavioural change around energy usage is not only beneficial for consumers through reducing bills, but is crucial in supporting the green energy transition as more off-peak usage means less reliance on carbon-generating electricity. Consumer NZ’s policy of sameness equaling fairness seems lazy and is certainly misguided. The majority of Kiwi consumers agree.

The survey found:

75% of Kiwis are interested in changing their energy usage habits to support the green energy transition.
83% believe Powerswitch should do more to highlight the potential benefits of energy plans that support the green energy transition.

When asked how energy plans that encourage customers to move their power usage off-peak, with the incentive of lower prices, should be reflected on Powerswitch, the survey found:

69% think an average (or mean) of the real savings achieved by customers on these plans should be shown.
12% said the average savings made through behavioural change should be ignored in the prices shown.
5% of these types of plans should not be shown on Powerswitch.
14% said none of the above, not sure.

The results clearly show a large majority of Kiwis are interested in changing their energy usage habits to support the green transition and believe the savings from plans that support this change should be shown on Powerswitch.

What next?

We reiterate our desire to negotiate a fair funding solution and call on Consumer to return our plans to Powerswitch ASAP. In the meantime, we have written to the Chair of the Electricity Authority to raise our concerns with the current funding model and how Consumer’s continued uncompromising stance is letting consumers down.

We also want Consumer NZ to properly engage with us and other retailers offering innovative time of use energy plans to ensure consumers are informed about the potential benefits of changing their energy usage habits to the benefit of their hip pockets, as well as the environment.

In the interest of transparency, we have provided Consumer NZ with a full breakdown on the survey results.

Notes:

¹ We commissioned market research agency PureProfile to survey 1011 New Zealand adults from their online panel between August 10 and 14, 2022. To qualify for the survey, respondents indicated they were aware of Consumer NZ and that is it responsible for running an energy comparison website (Powerswitch).