This electricity business can be a confusing one. Not only because the whole industry has so many components (like generation, transmission, distribution and retail), but then there are the various plans, fees and prices which can differ between companies and areas. It’s all a tad daunting if you’re not a part of the industry (and sometimes even for those of us that are!).
We get asked a lot about User plans. Most people don’t understand what they are, that they have the choice to be on a Standard or Low User plan (with any retailer), nor what the difference is between the two.
So in the interest of consumer awareness, we’re bringing you the enlightenment. Because being on the wrong plan can be a costly mistake, and an avoidable one at that.
Did you know that distribution companies charge different metering rates for Low Users and Standard Users of electricity, to ensure there’s a fair spread of cost amongst users? (Now you do!). User Plans and rates are set by the distribution companies, at thresholds based on kilowatt (kWh) usage per year. Households that use more than 8,000kWh each year should be on a Standard User plan, while households that use less than 8,000kWh over a year should be on a Low user plan. From Christchurch south, however, the threshold is 9,000kWh.
The Standard User plan:
Has a higher daily charge, but a lower charge per kWh used, so if you’re using lots of electricity, the lower unit charge balances things out. If you’re living North of Christchurch and using more than 8,000 units a year you’re generally better off on a Standard User plan. Further south, the threshold is 9,000 units a year. The sorts of situations we’d expect of Standard Users include households of more than two people who are home a lot and use a lot of electricity for heating and hot water, or large flats. Heating methods more than anything will contribute to higher usage. Heaters used constantly, like panel or oil heaters, underfloor heating, uninsulated hot water cylinders, and heated swimming/spa pools all contribute to higher usage.
The Low User plan:
A Low User plan is generally suited to people using less electricity than average. It’s designed so that the fixed rate is no more than 30 cents a day but the unit rate is higher, which means if you don’t use much electricity you’ll pay less than you would on a Standard User plan. If you’re living North of Christchurch and are using 8,000 units or less a year you’re classed as a low user. Once again, further south and the threshold increases to 9,000 units per year. Low Users tend to be households of one or two people living in well insulated, energy efficient houses and/or homes with gas heating or hot water.
If a household uses significantly more or less electricity than the plan that it’s on is designed for, they can very easily end up spending too much money on power. The greater the gap between their usage and the threshold between Standard and Low User, the more they’ll be paying unnecessarily.
To complicate things further (sorry!), changes to your household can easily affect how much electricity you use, and therefore which plan is best suited to your household. The most common lifestyle changes we’ve seen that can influence User plan include flatting, people moving in with parents or grandparents, having a baby and moving house. Proactive retailers (like us, we’re proud to say!) should be checking whether or not their customers are on the right plan for their situation. But many don’t, and sometimes plans remain in place for years despite all of life’s changes. Understandably, people rarely think to update their plan when their family circumstances change.
How can I tell what plan I’m on?
Check your bill. If your daily charge is about $0.30 per day then you’re on a Low User plan. If it’s higher, you’re on a Standard User plan. Your bill should tell you what plan you are on, but if it doesn’t, you can contact your electricity retailer to find out.
What about my usage?
Your current bill might show you a graph of your usage that allows you to roughly add up your usage for 12 months. Or if you’re super organised and keep your bills handy, you can add-up all of the kWh you’ve been billed for over the last 12 months. With some power companies you’ll have access to an online account which shows your usage information and allows you to work it out. If in doubt, check with your power company.
More confused than ever?
Check out this handy image:
I’m on the wrong plan! What should I do?!
First of all, don’t panic. Call your electricity provider (that’s us!) and let them know. It’s important to think about your consumption over the whole year, because you can only change plans once per year at no charge (additional changes will cost you money, regardless of which energy provider you’re with).