Common sense says that if something looks too good to be true, it probably is. And in the electricity game, you’ll find this phrase pretty accurate. Of all the deals and sign-up offers bandied about, when you dig a little deeper a lot don’t offer any real, long-term value. Sure, they look nice and shiny and enticing on the surface - but often, that comes at a price.
So there’s good reason for consumers to keep their wits about them when choosing which power company to join. But we’re all about bringing honesty and transparency to the industry, and we know it can be hard to sort the wheat from the chaff - so, what to look out for?
Prompt payment discounts (PPDs) or other “guaranteed” discounts
These nastie little fellas should be long gone. Last year the Government’s Electricity Price Review (EPR) recommended that PPDs get the boot, and while a number of companies have done just that, there are a few still hanging onto them for dear life.
Why don’t we like them? For one, they’re really just late payment penalties in disguise - if you don’t pay before the due date, you’ll be charged a fee that’s often well over and above what it costs your power company to recoup any late payments. We also know that PPDs disproportionately affect those already having trouble paying their bills - the very people who are most likely to be encountering energy poverty, and who we should be doing our best to help. We reckon cheaper power prices overall is the fairest way to go.
Plus, a bit of sneaky behaviour means that some power companies have shifted the so-called ‘discounts’ to other areas, like a 16% discount for paying by direct debit. The big question is whether that ‘discounted’ rate is actually the standard rate, and it’s simply an excuse for retailers to hike the prices of other payment methods… a good incentive to do your homework when it comes to pricing! Either way, we reckon it doesn’t adhere to the spirit of the EPR goal of an industry that works for the people - why not just keep things transparent with better rates upfront and for everyone, huh?
Big joining credits - ‘$300 off your first bill!’
They’re big and impressive. We get it. But before you fall into the trap, consider the following: - Are you spending that amount in one power bill? If not, you might not be able to redeem the full amount they’re offering. - Once your first bill has been paid, what will your next bill cost? Will you end up paying higher kWh or daily fees for your power? Over the course of a year this could really add up. So while it might seem like they’re offering you a good deal in the first instance, some power companies give with one hand, only to take it all back again (and then some) with the other. Do your research, read the fine print and compare power deals. - What’s the catch? Joining credits often go hand in hand with exit fees and long fixed-term contracts (see below). In order to make the credit back, power companies typically need to ensure you remain a customer for at least a year or more… or pay them back if you don’t. Joining offers aren’t just limited to credits – the same thing applies to free TVs, appliances or puppies wrapped in rainbows. How much are they really worth?
At Flick, we offer bill comparisons so you can see how much you might save with our pricing plans by making the switch. Too easy!
Break fees and notice periods
If you decide to leave your power company before your fixed term contract has ended, there’ll usually be a fee to pay. Power companies need to make enough money off you in order to pay for whatever credit they gave you when you joined, so the break fee will normally be related to the value of the offer. Some power companies also require you to give 30 days’ notice before you can leave them, just because. Remember, power companies are legally obligated to switch you to the provider of your choice within 10 business days, unless an alternative switch date has been requested by you. Any more than that in the fine print is just company policy.
It’s worth making a note of break fees associated with friend referral campaigns as well. If you sign up to a power company based on a friend’s referral for a cash offer, you may be obliged to remain with that company for a set period of time, or pay them back if you leave early. Could you save more than the value of the offer during that fixed term simply by being with the cheapest power retailer for you?
This is a goodie. How much will you need to spend with your power company in order to earn enough points to get your hands on that shiny, new crockpot? And will that mean higher power bills? If you’re all about rewards then these deals might be a goer for you - but if you’re after lower power bills, check the pricing details!
Free power moments
The idea of free power for an hour, a day or a week sounds great. It’s easy to imagine getting all your washing and charging done in a confined timeframe - and it makes sense if it’s free, right? Kinda. Before diving in, be sure to check what you’ll be paying outside of those times too, because you may end up covering the cost of your ‘free’ power at other times of the day.
Plus, it’s also worth considering whether you’ll use it to its full potential. A bit like a gym membership, you might only use it a couple of times a month, which means you won’t be taking advantage of the advertised discount, and you’ll be paying for something you’re not using. Sharp hourly rates might be the better way to go!
100% Renewable energy
Unless your home or business has invested in generating all of your own power, you’ll never be using 100% renewable energy. Once generated, electricity in NZ is poured into the national grid, which is then distributed around the country. It’s a vegetable soup, of sorts - you can’t choose to get wind or hydro or coal once it’s all blended together. It’s a common misconception that signing up with a specific retailer means that you’re choosing to use renewable energy at home - and that’s not the case.
If you’re interested in reducing the carbon impact of your household, the CHOICE app is a good place to start. This shows you the mix of electricity in the grid at any one time, and it applies to all Kiwis, regardless of the power company you’re with. So when the mix of electricity is dirty, you’ll be able to choose to turn things off.
OK - so are any deals out there good value?
It’s definitely possible, yes. But (and we can’t stress this enough) - YOU NEED TO DO YOUR HOMEWORK. Whatever the deal, don’t just take it at face value. Believe us, power companies have done the maths, and they won’t lose out, so it’s important you check things like Powerswitch and Switchme to make sure you’re getting the best deal you can for your household (it also pays to note that sometimes these sites will include discounts for things like free hours or power packs in the overall price, so make sure you factor these in when making your decision!).
In our opinion, true value lies in honest, fair and transparent power pricing and giving consumers the ability to make informed decisions that work for them and their families. None of this cloak-and-dagger, smoke-and-mirrors BS, thanks very much.