Canstar Blue’s latest research shows that while over two-thirds of Kiwis actively try to reduce their power bills, only a third have compared electricity prices over the past 12 months. But if you want to save money on your electricity bills, the easiest way is to switch your power provider.
It’s a quick and easy process that could save you hundreds of dollars per year. So if you want to switch power providers and save, Canstar Blue runs you through an easy 5-step process:
How to Switch Power Providers Step 1: Check your current contract
The first thing to do is to check your current power contract to see whether you’re on a fixed term or open contract.
An open-term contract means that you’re free to change power providers at any time, and without any penalty fees.
However, if you’ve signed up for a long-term deal, you need to check your contract to see what penalty fees you could incur for breaking your contract.
This is an especially important step to take if you are locked into a deal that comes with a free gadget or household appliances. In this instance, you’ll probably have to cover the full cost of your freebie, too, which could negate any savings to be made by switching power provider.
How to Switch Power Providers Step 2: What type of power user are you?
When you sign up for a power plan, you are asked whether you’re a low user or standard user. This affects how much a power company charges you for the energy your household consumes. This is because a power bill is made up of two key charges:
- Fixed-rate daily charge – a fixed rate charged every day regardless of how much power you use
- Variable usage/per unit charge – a rate that is charged for every kWh used
And the way these charges are implemented varies depending on whether you are a standard or a low user:
Standard user: a household that uses over 8000kWh per year
A standard user consumes relatively high amounts of electricity each month. As a result, power companies offer competitive variable usage rates. To balance this, they charge a higher fixed-rate daily charge.
Low user: a household that uses under 8000kWh per year
Low users pay a much lower fixed-rate daily charge, but significantly higher prices for the power they use. This means that their fixed costs are much lower than those of a standard user. As long as they don’t use much power, their bills will be lower.
However, because most Kiwi homes are now low users, over the next five years the low-user electricity tariff is being phased out. As a consequence, if you’re on the low-user tariff, your power bills could have already started to rise.
This is because for each year of the five-year phase-out, power companies are able to increase their daily charges for low-users by around 30c, until they are on a par with standard-user charges. However, not all electricity companies are increasing their charges. Currently some are charging around 66c per day for low-users, others are charging half that and others have cut the daily tariff altogether.
Of course, you need to balance the per kWh charge of each power plan when comparing the savings you can make from shopping around for the lowest daily charge, but there are big savings to be made.
How to Switch Power Providers Step 3: When do you use most of your power?
Once you’ve worked out whether you’re a low or standard user, take time to check when you’re using most of your electricity. You can check this through your provider’s website/app. Do you use a lot of off-peak power, and at weekends, or are you predominately a peak power user?
The exact times differ between plans, and even location and/or network. But, generally speaking, peak times are Monday to Friday, 7am-11am and 5pm-9pm.
Knowing when you use most power is important because many power providers offer different rates at different times of the day. For example, here are the current different standard rates offered in Auckland by one electricity retailer:
Standard electricity rates per kWh
- Peak: 0.23c
- Off-peak: 0.14c
- Night 0.12c
As you can see, if you burn most of your electricity outside of peak times – or can easily move most of your power consumption to off-peak – there are big savings to be made.
How to Switch Power Providers Step 4: Compare providers
NZ’s energy market is dominated by four big gentailers, which both generate electricity and sell it through their retail businesses:
- Mercury – (27.47% of market). Includes the brands: Trustpower & Globug
- Genesis Energy – (22.53%) Includes the brand: Frank Energy
- Contact Energy – (20.17%)
- Meridian Energy – (12.74%) Includes the brand: Powershop
However there are other smaller players:
- Nova Energy – (4.23%)
- Pulse Energy Alliance – (4.06%)
- Electric Kiwi – (4.04%)
- Vocus – (2.3%)
- Flick Electric – (1.16%)
- Ecotricity – (0.62%)
Together with Octopus, a new player in the market that offers low-cost deals, these power companies comprise 99% of the market in NZ. And to find the best deal, you’ll need to spend a few minutes researching prices on their websites.
For, unlike telco and broadband pricing, there’s no nationwide standard power price. The cost of your power depends on where you live. So for quotes, you’ll have to enter your address and user type on each provider’s website.
From there it’s the simple process of comparing the prices you are offered and considering any bundle deals…
→ Related article: How Much Are You Paying For Power? Average Electricity Costs per kWh in NZ
How to Switch Power Providers Step 5: How do bundles really stack up?
Some power companies offer fancy freebies when you join. This can be in the form of home appliances, or cut-price deals if you agree to sign up for fixed long-term periods, or bundle with other utilities, commonly broadband. But you need to ask yourself how free the freebies really are.
“Bundle and Save” is a simple promise. But doing the math is often more complicated. A 10% discount on your power if you add broadband might seem attractive, but how does the broadband deal compare with other packages in the market?
No-frills providers such as Skinny and 2degrees offer some very good value broadband deals. So before being sucked in by the promise of bundled discounts, get your calculator out and work out the true savings.
The same goes for the offer of free fridges, TVs or laptops. Power companies don’t give away devices at a loss. The consumer pays, in the form of higher unit prices for the power they use on their plans. And you’ll invariably have to commit to a long-term contract in return for your freebie goodies.
In most cases, opting for the cheapest no-frills deal will provide the biggest savings.
→ Related article: NZ’s Cheapest Broadband Plans
Compare electricity providers with Canstar Blue
Looking for the best power provider? We can help with that! Canstar Blue rates NZ power companies for customer satisfaction and value for money, see the table below for some of the results, or you can click on the button below for the full results of our survey.
Canstar Blue’s latest review of NZ power companies compares them on customer satisfaction. The table below is an abridged version of our full results, available here.
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Canstar Blue NZ Research finalised in April 2023, published in June 2023.
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About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.
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