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Low User Daily Charges Are Out!

Low User Daily Charges and their removal discussed by Power Compare
Friday, January 20, 2023

When you are picking a power plan, you’ll have the option to choose between a low-use or standard-use plan. A low-user plan will charge you a discounted daily fixed charge but higher kWh rates, whereas a standard-user plan will typically have a higher daily fixed charge and lower kWh rates. This cheap low user fixed daily charge came about nearly 20 years ago through legislation. However, it’s all about to change… for the better!

The regulations for low user daily charges are being scrapped! This will benefit all Kiwis and improve the power industry. 

Read on to find out everything you need to know AND what to do if you’re on a low-use plan! 

Low User Daily Charges?

What are they?

All power plans include a fixed daily user charge. This charge goes towards paying the costs associated with connecting to Aotearoa’s electricity grid. On top of the daily fixed charge, consumers pay for the amount of power they actually use or kWh (kilowatts per hour).

A low user daily fixed charge sees the daily charge capped at a very small amount (30 cents a day). This is a big discount on what you should be paying to maintain your electricity connection. This is unlike a standard user daily charge which can cost much more, and potentially unfairly charge you more than your share. 

Why do they exist?

Low user daily fixed charges were introduced in 2004 through Government regulations. These regulations required power companies to offer low-use plans that included the low user daily charges. The capped user charges were designed to help households who use less power and to encourage Kiwis to reduce their power consumption. 

Regulations are impacting many Kiwis

Over the years, it’s become apparent that these low user charges have actually adversely impacted many Kiwis. 

The regulations were intended to reduce power bills for low-income families who consume less power. However, due to the way they are designed, it actually only benefited some households while it plunged others into financial hardship.

Here’s a list of all the negative effects of the regulations:

1). Disadvantages the people it should be helping

The low fixed user charges have disadvantaged many households, particularly low-income ones. With energy consumption decreasing since 2004, nearly 68% of Kiwi households are able to go on a low-use plan. This means that those on a standard-use plan have to cover more of the costs of maintaining the electricity grid for everyone through their standard user charges. So, many low-income households who have high energy consumption are actually paying more than they should and there is no other option as their power usage does not allow them to be placed on or benefit from low-use plans.

Also, since 2004, it’s become apparent that energy consumption does not correlate with social class or economic position. Many richer households are the ones who consume the least power, so they can save heaps with the low user charges. These savings are compensated by other consumers, often low-income households, who can’t afford it.

2). Only helps energy-efficient households

These regulations favour wealthier households who can afford to adopt energy-efficient practices, like installing double-glazing, solar panels, or buying energy-efficient appliances. However, low-income households who can’t afford these measures must unfairly pay more. 

3). Fuels customer confusion 

With a lack of education around the difference between low-use and standard-use plans, many households are ending up on the wrong plan and paying more than they should. Nearly 45,000 homes are paying $200 more than they should each year. 

Find out what plan you should be on, here!

4). Incentivises poor energy practices

In an effort to stay on a low-use plan and avoid the high costs of actually using power on these plans, many households are either under-heating their homes or avoiding buying energy-efficient appliances. This leads to heaps of Kiwis getting sick or taking costly actions against the environment (i.e. using gas burners and petrol cars). 

5). Creates challenges for the power industry

As electricity consumption continues to grow in Aotearoa, the power industry will need to make many changes in order to meet this demand. However, the current regulations make changing pricing structures much more challenging.

Phasing out low fixed user charges

Due to the various reasons stated above, the Government decided to remove the regulations for low user daily fixed charges. 

The industry advised them to phase out the charges gradually to avoid any shock this might have for low-use households. So, the fixed daily user charges will increase incrementally by 30 cents each year going from 30 cents a day to $1.80 a day by 2026. After 2026, the regulations will be removed. 

It’s unclear how power companies will structure electricity plans for consumers. About 60% of households (those on a standard-use plan) are likely to receive lower power bills. However, around 40% of households (those on low-use plans) will see their power bills increase. 

While some Kiwis may face bigger power bills immediately, in the long run, everyone will benefit from these changes. Without the regulations, power companies can create a variety of new plans, which will help consumers avoid paying for the costs of grid upgrades, and allow them to access cheaper off-peak prices. 

Are you on one of these plans? Here’s what you need to do! 

If you’re on a low-use plan, you may see your power bills increase.

With the low fixed user charges jumping up to 60 cents a day from 30 January, you may want to start looking at cheaper alternative plans. 

So, what’s the best thing to do? 

Use Power Compare!

Head to Power Compare! 

If you need to find a new cheaper power plan, then you have to use Power Compare!

Power Compare is a comparison website where you can compare various power plans and providers to find one that’s right for you! 

We have plans with special benefits, free hours of power, joining perks as well as exclusive deals! You’ll easily be able to find a plan that saves you hundreds of dollars! 

Plus, the website is super easy to use! 

All you have to do is:

  • Jump onto the website.
  • Type in your address.
  • Select some filters that match your preferences.
  • Hit enter!
  • Browse all the different plans available to you & compare them side-by-side.
  • Find one you like and switch!


Alternatively, if you’d rather chat to a friendly human, then give our customer support team a free call on 0508 22 66 72. They’ll help you out!

Avoid any bill shock if you’re on a low-use plan by heading to Power Compare! 


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