Contact Energy customer Karina Tipene said the scrapping of disconnection fees would make a huge difference to struggling families. Photo / Alex Burton
Contact Energy has scrapped disconnection and reconnection fees for non-payment after 8000 people signed a petition calling for them to be banned.
Contact said the fees would be dropped today for “all customers struggling to make ends meet”.
“This move will save thousands of families on average between $54 and $300 on connection charges applied for non-payment,” Contact chief retail officer Matt Bolton said.
Contact Energy customer Karina Tipene said the news was “bloody awesome” and wanted to see all other providers do the same.
Last month Tipene revealed she prioritised her powerbill because of medical dependency but it often mean cutting back on food and going without heating.
“This is good news because there are so many who have been disconnected who can’t pay it and then they are trying to find another provider who will sign them up without another fee.”
“It is a little late for some people but it is good news.”
Since Tipene’s story in the Herald Contact Energy had been in touch and reduced her power costs by 20% until October.
The decision to cut fees comes after nearly 8000 households signed the Common Grace Aotearoa petition calling for scrapping of fees.
The organisation’s investigation found huge variations in what companies charge.
It said more clarity was needed about the true costs of disconnection and reconnection.
Co-director Kate Day said she was pleased Contact has done this to assist those needing support.
“This is a compassionate step that will make a tangible difference to thousands of people,” she said.
“We applaud Contact for doing the right thing and encourage other companies to follow their leadership.”
According to Consumer NZ, up to 40,000 households had their electricity cut off because they couldn’t afford to pay their bills.
The four main power providers make a combined $7.4 million in earnings daily.
Day said at this moment of hardship, power companies are allowed to charge them a disconnection fee, then an additional fee to reconnect their power.
“We know that these fees are causing harm and pushing people further into debt.”
She said one family spent an extra week without power during winter so the solo mum scrambled together the fees to get the power turned back on.
“Disconnecting people from an essential service and then charging them is “a penalty for being poor” and should be scrapped.
“We see the fees as a penalty for being poor — they are hitting people who obviously can’t even keep up with or pay the cost of an essential service,” Day said.
“We saw one person who went without power for another week because they had to pay off what they owed before reconnection.”
Toast Electric and Nau Mai Rā do not charge any fees for disconnection or reconnection.
Neal Barclay from Meridian said the provider would never disconnect people who were struggling and who were engaged with the company.
“Almost all of the people we disconnect are people who move into properties with no intention of paying, rack up large bills and then refuse to engage with us,” Barclay said.
Paul Fuge, of Consumer NZ, said the removal of an essential service as a means of debt management was unsafe and needed to be phased out.
“Ahead of a looming crisis, we need to act to identify more appropriate and less-dangerous mechanisms to recover debt,” he said.
Fuge said being disconnected also meant a poor credit score. A bad credit rating meant some households couldn’t find a new power supplier to sign them up.
Kirsty Wynn is an Auckland-based journalist with more than 20 years experience in New Zealand newsrooms. She has covered everything from crime and social issues to the property market and has a current focus on consumer affairs.
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