How to Save on Your Electricity Plan

How to Save on Your Electricity Plan

If you’re paying too much for power, it could be time to review your electricity plan or provider. Canstar guides you through some tips to help you save on your electricity plan, alongside some electricity deals currently on offer.

Power prices are a common concern here in New Zealand. Particularly as winter sets in and our bills rise sharply as we switch on heating to combat the cold. So as the cooler nights set in, now is the time to review your electricity plan, to see if you’re getting the best deal. Because while cutting usage around the home is all well and good, if you’re overpaying for the power itself, you’re not getting the savings you could be.

So how can you save on your electricity plan? Canstar runs through some power plan tips and tricks to ensure you’re getting the best deal on the market.

How to Save on Your Electricity Plan: lightbulb and stack of coins

Make the most of off-peak usage

Some power plans offer two rates for power: peak, and off-peak. Off-peak power is simply the power used during quieter hours. Think late at night when most people are sleeping, or in the middle of the day while everyone is at work. Because there’s less demand during these hours, some power companies offer cheaper rates to entice users to shift more of their usage to these hours (lessening the high demand during peak hours).

If you can structure your power usage to make the most of off-peak power, you could find yourself paying a lot less for power. For example, by doing the majority of household chores, cooking meals, or charging an EV off-peak, you can get a lot done for little cost.

If you do choose an off-peak power plan, be sure to weigh up factors like:

  • In exchange for the cheaper off-peak tariffs, am I being charged a higher peak power rate?
  • What are the off-peak hours? While there are several off-peak hours a day (early mornings, late nights etc) some power providers may only offer cheap power during some of these times, eg a few hours late at night.
  • How much of your usage can be moved off-peak? If you still use plenty of power during peak times, the savings may be minimal, or, it could even end up costing you more.

Free power hours

Another option could be to take it a step further and make the most of free power hours. These plans offer free off-peak power, making the above strategy even cheaper to implement. In addition to the above factors that need to be considered you should also consider:

  • How many free hours am I getting?
  • Are the hours customisable? Some providers give a fixed time window, while others let you choose your free hour(s)

Two great power plans offering free power hours are Contact’s Good Nights plan and Electric Kiwi’s MoveMaster plan.

Carefully consider any deals and specials

Signing-on deals are commonplace in the electricity market, and can make for great value. But it’s important to choose the right deals.

Free TVs are great, but if you don’t need a new TV, you’re not saving any money. And, ultimately, the cost of any freebie will be spread over your electricity plan.

Another signing-on deal that can help you save is signing on credit. Bonus dollars loaded onto your power account is always a help. But it pays to consider what happens once that credit is gone. Often, the only way to get these deals is to sign on for a fixed term. And if the power rates are higher on that fixed plan, then once the free credit is gone, you’re stuck overpaying. Depending on how much you overpay, the plan could cost you more in the long run.

Of course, a signing on deal doesn’t automatically mean your power rates will be high. You could get free signing on credit and great rates. But they should be considered carefully.

However, it might be best to go for a plan that does away with deals and gimmicks and simply offers great low rates.

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Do the math

Finding the cheapest power deal isn’t always easy.

If a plan comes at a higher variable rate, but a lower fixed rate, will that be cheaper or more expensive? Or if the rates are higher, but you get a few hundred dollars in credit upon signing up, how does that work out over the life of the plan?

Unfortunately, it all comes down to how much power you’re using. So the only real way to figure it out is to take a look over your past power bills and do some math. By calculating your average usage, factoring in the different rates on different plans, and any signing on credit or discounts, you should be able to see which plan will be the cheapest.

But while the fixed and variable rate is the most important factor, don’t forget to account for other factors.

For example, the aforementioned free power hours are a great way to save but can be a little hard to measure. Your savings depend on the theoretical idea that you’ll increase off-peak usage and minimise peak usage. If your power bill can show usage by hour, it could be a little easier to see how much power you currently use at off-peak times. But the idea is still that you’ll begin moving as much of your usage off-peak as possible.

Another example could be things such as prompt payment discounts. A Canstar team member recently compared their current power plan with another plan that had cheaper fixed and variable rates. However, this cheaper plan didn’t offer any prompt payment discount, which they currently take advantage of every month. As a result, their current plan (with the higher electricity rates) was actually cheaper.

Compare power providers

A great way to start finding the best power provider is by checking out Canstar’s latest Star Ratings awards, which rate NZ power companies for customer satisfaction and value for money. See the table below for some of the results, or 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.

See Our Ratings Methodology

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Low user vs standard user

As the name suggests, a low user is someone who doesn’t use a lot of power. By law, all electricity providers must provide a low user tariff option, and if you fall into this category, you can save money on power by getting special low-user rates. However, what a lot of people don’t realise, is that the ‘low user’ figures were set years ago (and haven’t been updated since), back when our homes were guzzling a lot more energy.

Thanks to LED bulbs and modern energy-efficient appliances, the majority of Kiwis are now classed as low users! So realistically speaking, even if you use a fair bit of power by current standards, you could still be eligible for low-user rates (and low-user savings!).

To be considered a low user, your household must be:

  • A household that uses 8000kWh a year or less
  • For households in Christchurch and further south, this is set at 9000 kWh or less
  • Your main household (holiday homes, vacant houses and offices cannot receive low user rates)

Low user tariff being phased out

It’s important to note that the low-user tariff is being phased out over the next five years. But that doesn’t mean you can’t make the most of it until then.

Over the next five years, the daily charge will increase by 30c each year. From 30c, the daily low-tariff charge has already been raised to a max standard charge of 60c. And by 2027, it will rise to 180c, in line with the standard-user tariff.

To offset this increase, the cost per kWh should come down for low-tariff users. But how this discount is passed on to consumers is up to individual power companies. This means over the coming years, it will pay to be extra vigilant about the price you’re paying for your electricity.

→Related article: Power Price Hikes: End of the Low-User Electricity Tariff

Consider your contract

When signing up for power (or broadband or phone plans) you commonly have the choice to sign up for a plan on a:

  • Fixed-term contract – commonly for 12 or 24 months. You agree to stay on the plan for a fixed period of time, but have to pay a break fee if you choose to end the agreement early
  • Open-term contract – or a no-contract plan. This type of plan allows you to leave or change plans at any time without cost

On paper, no-contract power plans look better. After all, why lock yourself in for a year if you don’t have to? But it’s important to note that, usually, fixed-term and open-term plans have very different benefits and costs. Many providers offer signing-on benefits, free credits, and added discounts, but only if you sign up for a 12- or 24-month term. If you choose to keep your plan open, that’s fine, but you’ll miss out on some, or all, of these benefits.

This means you could face the dilemma of locking in a great deal now, but missing the opportunity to take advantage of any future deals, or missing out on some great bonuses now, in exchange for the freedom to switch plans as better plans (potentially) arise in the future.

However, there are plenty of providers that openly embrace both. Giving you no contract power, along with some great deals and rates. You can see what’s available below.

→Related article: No-Contract Power Plans: What’s Available?

Bundle your utilities

An electricity bundle is when a single company offers a deal to supply your power and one or more other utilities. For example, having one supplier for power, gas, and broadband. It’s typical for bundled utilities providers to offer discounts and savings if you sign up for multiple services.

Of course, it’s not always straightforward. You need to ensure that the final cost is good value. If saving on electricity comes at the cost of overpaying on broadband, then will it still work out cheaper overall? That’s not to say every utility has to be the cheapest on the market. Your phone plan might be a few dollars more than a competitor, but it might come with a bundled discount that significantly reduces broadband costs, outweighing the added expense.

Again, it might take a little bit of math.

→Related article: Electricity Bundles: Why Combine Your Power and Utilities?

Remember, it’s not all about the rate

Ultimately, while you don’t want to pay a premium for your power, finding the cheapest provider isn’t all you should focus on. There are plenty of other factors that influence the level of satisfaction you get from your power provider.

Do they have a local help team that can be reached easily? Does their phone app offer plenty of tracking features and the ability to pay your bill quickly?

Factors such as these play a big role in your experiences with your electricity provider, and should be considered in any electricity plan you choose. In fact, in our last electricity survey, consumers said Customer Service was second only to Value for Money!

So, yes, price is important, but a dollar or two more a month may be worth it if that provider offers an excellent all-round service.

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author andrew broadley

About the author of this page

This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.

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