Media, research, news and updates

What are the implications for the "Squeezed Middle"

Research from Martin Jenkins

An analysis of the "squeezed middle" in Aotearoa and the ways that UDL can support them. We have defined the squeezed middle as the 1.4 million people who indicate they only have just enough money to meet their everyday needs.

Some key elements of the "squeezed middle":

• more likely to experience problems with their electricity company than other utilities
• typically have household incomes between $60,000 to $80,000  
• 50% are in full time employment
• usually live with a partner or with a partner and children

Read the full Martin Jenkins report here.

• Kalina Shipkov appointed Deputy Commissioner of Tautohetohe Whaipainga | Utilities Disputes
• Utilities Disputes Welcomes Board Chair Deborah Hart

• Power outage Northland and collapsed Power Pylon 

We appreciate that as inflation rises and the cost of living rises many households in Aotearoa New Zealand are facing hardship.

The information below is designed to assist you understand why you may be seeing higher bills from your power company and what you can do.

Utilities Disputes – who are we?

Utilities Disputes – Tautohetohe Whaipainga (UDL) is a free and independent dispute resolution service in the energy market.

 While we cannot look at a complaint that is solely about the price of your energy use we can ensure a power company has: 

• done what it should to help you identify the right plan for your household
• explained their charges adequately, including price increases, so you know what you are paying for 
• provided the right information to you and followed the Consumer Care Guidelines the Electricity Authority has in place.

We can work with you and your power company to resolve any complaint.  If that is not successful we can issue a decision.

What is the removal of low fixed tariffs?

The overall cost of your electricity is broken down into two main parts.

1. you pay for the actual electricity you use, and;
2. a fee for the upkeep of the power grid that delivers electricity from the power station into your home – this fee is called a daily fixed charge.

The government has approved the removal of a low daily fixed charge sometimes called the low fixed tariff which was available to low users of power.  From 1 April 2022 this is being  phased out over five years  The phase-out period of five years is to help limit the impact on consumers’ electricity bills.

The government’s view is that the low fixed tariffs, originally intended to help those in need, are no longer beneficial. Around 68% of all electricity users are now eligible for the low fixed tariff meaning fewer are paying the standard fixed rate to cover the costs of maintaining the grid.

Low user plans may come with a higher rate for actual power use. One side effect of this is that some people underheat their homes to save on power bills which can harm their health and well-being.

Government believes that most households (around 60%) including low-income earners will be better off from this change as power companies may offer pricing plans that can help manage peak periods of electricity use and avoid costly network upgrades keeping overall prices lower for consumers.

What is low use?

Low use is defined as 8000 kWh per year in the North Island or 9000 kWh per year in the South Island. 

What impact will there be from the removal of low fixed tariffs?

Analysis of the impact on households suggests about 60 per cent of all households - about 970,000 households - are expected to have lower power bills during the phase-out.  But around 40 per cent - about 690,000 households - are expected to face higher power bills.

While the government expects all households to benefit long-term from the changes, there is uncertainty over the short-term impact during the phase out, including how retailers will structure their pricing plans over the next five years.  Because of this, the Government will conduct a mid-point review of the phase out sometime in late 2023.

Are all power companies removing the low fixed tariff?

Not all power companies are removing the tariff immediately.   Your power company will let you know if they are making any changes. Some power companies that are may voluntarily offer some form of discounted daily fixed charge for low use households.

Government has secured an industry commitment to develop and fund a $5 million power credits scheme to support low-income, low-use households who are struggling to pay their power bills through the phase-out. Any such households should contact their power company for information and support. Participating power companies may be able to offer a power credit towards their power bill once the scheme begins.

How much are we talking about?

The low fixed tariff is currently 30c a day (plus GST).   Power companies are able to increase this over a five-year period.  Some have chosen not to at this stage.  

Those power companies that are phasing out the low fixed tariff over time may apply the first increase up to 60c a day (plus GST). This may continue to increase by 30c a day (plus GST) each year for 5 years until 2027.

Annually the increase will be from the current $110 per year (plus GST) to $220 (plus GST) increasing  each year to $657 (plus GST) by 2027.

What other fees are changing?

It is common for electricity rates to change just once every 12 months. At the same time as the beginning of the removal of the low fixed tariff, some power companies are increasing their variable rates as often happens around the first few months of the year.

Some lines companies are also increasing their variable charges.  These will be passed on to you by your power company.

If you are on a fixed rate plan you may notice no change until your plan comes to an end.

I receive gas from my power company – is this going up too?

If you are connected to gas you may also experience an increase in your fixed daily rate as well as an increase in the variable rate.

If I can’t pay my bill what can I do?

First talk with your power company. 

Power companies are required to follow the Electricity Authority’s voluntary consumer care guidelines and work with their customers facing payment difficulties to help them access and afford a constant supply of electricity to meet their home needs.

If I want to know more or cannot pay my bill where do I go?

You can also compare the prices and services of different retailers. New Zealand has a number of third-party methods for consumers to estimate energy usage and compare prices such as Powerswitch.

Power Switch is also available for energy customers to compare their pricing plans with other power companies https://www.powerswitch.org.nz/.

There are many national agencies that may be able to assist you. Some of these are listed below:

• Warmer Kiwi Homes programme provides 80% of the costs of insulation and an energy efficient heat pump for eligible homeowners.
• WINZ may be able to help you with an urgent power, gas or water bill, or the costs for heating if you have no other way to pay.You don't have to be on a benefit to qualify for this help. You may have to pay the money back depending on your situation https://www.workandincome.govt.nz/eligibility/living-expenses/heating-and-power-bills.html.
• The Winter Energy payment is available to people receiving superannuation or other benefits to help with energy bills overwinter. More information about this is available from work and income New Zealand https://www.workandincome.govt.nz/products/a-z-benefits/winter-energy-payment.html.
• For free budgeting advice support and online resources see www.govt.nz – family and whānau financial help for your family.
• For face-to-face help with budgeting, debt and money problems you can contact a budgeting service. You can look for one in your area, on the MoneyTalks website or the Family Services directory – MoneyTalks provides advice by email, text, live chat and phone (0800 345 123).
• For help with debt and money problems you can get help with Christians Against Poverty (CAP). You can call CAP on 0508 227 111.
• If you can't find one, your local Citizen Advice Bureau (CAB) can help you find a budgeting service. Some CABs also run regular budgeting clinics. 
• You might find joining a local  MoneyMates group These are support groups for people wanting to improve their budgeting skills. 
• You can also get budgeting and debt management information and advice on Sorted.
• Find some more tools here https://goodshepherd.org.nz/your-tools/.

January 2026 - Read the latest from UDL...