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Low-user electricity tariff review mooted

NZN 26/05/2017 Pattrick Smellie

Electricity retailers are pushing for a government review of the 13-year-old low user electricity tariff.

This follows comments this week by Energy Minister Judith Collins that she is willing to seek advice on an issue long-stalled because of its political sensitivity.

Introduced by the Helen Clark-led Labour government in an attempt to assist low-income households, the low user tariff has become a default for small households irrespective of income, while large households on low incomes who use large amounts of power get no benefit from the scheme.

However, the tariff's popularity and apparent good intentions have made governments unwilling to tackle the issue.

A spokeswoman for Ms Collins confirmed low-user fixed charges had been raised with the minister at an electricity industry conference on Tuesday.

"She has asked for advice from officials about the regulations."

The chief executive of the Electricity Retailers Association of New Zealand, Jenny Cameron, said in a statement "the fact that the poorest people are cross-subsidising wealthier households because of the low fixed charges is the opposite of what was intended when they were introduced in 2004 and therefore warrants a review".

Ms Cameron cited a report in March by consultancy Concept Consulting that estimated only 5 per cent of the total benefit of the scheme is captured by the lowest income households.

The low user charge is based on electricity usage rather than household size, meaning for example that single people and couples are able to take advantage of the fact they use relatively little electricity, regardless of income.

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