Progress on the Electricity Price Review (EPR) might be slow - especially when it comes to putting recommendations into action - but today things kicked up a notch. Whoop!
The EA has announced it’s imposing a rule that will mean power companies have to wait 180 days before they can contact customers who’ve jumped ship, and dangle cheeky offers in front of them to try and tempt them back.
Known as win-backs in the industry, these special counter-offers include things like fridges, cash, lower power prices, and dirty ol’ prompt payment discounts, and they’re usually things that aren’t offered to a retailer’s loyal customers who’ve stuck around for the long haul - only to those who decide to walk (and walk they should!).
Those of you who’ve been following our fight for a fairer industry will know that we’ve been calling for the end of win-backs for some time, now. While win-back tactics might look good on the surface, especially for those who’re proactive and engaged when it comes to switching retailers and finding the best deal, in reality winbacks have only helped to add to the problem of a two-tier market that advantages those who switch retailers at the expense of those who don’t. That’s because the research shows that consumers who change retailers are rewarded by winbacks, benefitting from things like lower power prices and sparkly new electronic goods.
But loyal customers who stay with the same retailer pay the price, with higher charges that prop up the winbacks model. The Government’s EPR estimates that between 400,000 - 750,000 households have never switched retailers since records began, back in 2002 (crikey!), and also shows that vulnerable consumers are more likely to be among those who don’t switch. So, while one tier benefits, the other tier suffers - and that’s plain unfair.
The EA’s ban means that retailers can’t offer customers win-backs for a period of 180 days after a customer has switched to another retailer, and instead, will hopefully be more encouraged to offer ALL customers the best deals right off the bat and reward their loyal, long-time customers.
And, for smaller, independent power companies, the new ban will mean more time and opportunity to prove themselves to new customers on their own merits (like offering competitive power prices), without the bigger retailers cutting in and raising costs through the roof. It’s good for competition and it’s good for customers. Win-win!
The new ban comes into play on 31 March, and we’re hopeful that it signals the start of some bigger, crucial industry and market changes that will have ongoing positive effects for Kiwis. There’s still lots to do, but you can bet we’re in there batting for the customers. Flick yeah!