An "energy poverty" crisis is emerging as thousands more people with unpaid bills have their power cut off.
Community workers and a power retailer are calling for urgent action after almost 12,000 homes had their power cut off in the past three months because of overdue bills.
That's up from about 2000 disconnections in early 2008, according to data from the Electricity Authority.
Energy poverty means a household is paying more than 10 per cent of its income on power.
The 500 per cent increase in cutoffs over a four-year period is the result of a combination of factors, Powershop head Ari Sargent says.
They include retail prices which have more than doubled over the past four years according to government figures, while wage growth has stagnated in the wake of the global financial crisis.
That divergence has seen the Labour and Green opposition parties promise to restructure the electricity market if they win next year's election, in a bid to cut household power bills by between $230 and $330 a year.
Lastly, retailers are now more willing to cut off users who fall behind on their bills, having put systems in place to prevent a repeat of the 2007 power cut that killed Auckland woman Folole Muliaga, who was reliant on a mains-powered respirator.
Cutoffs dropped sharply after her death, but have since steadily recovered that ground.
Powershop's own numbers show most of the cutoffs - 72 per cent - are actually high-energy users, consuming more than the national average 8000KWh of electricity a year.
Community Energy Network head Jo Wills says the figures show people from lower socioeconomic backgrounds are finding it increasingly unaffordable to pump more and more heat into their substandard houses.
She said preliminary findings of a survey of low-income areas showed some people spent up to $300 a month to heat their homes, meaning any household earning less than $3000 over the same period was technically in energy poverty.
"What we are finding is that people are choosing to use less heating because they can't face the bills coming through," she said. "It has a lot of flow-on effects [such as] the costs of healthcare when they are cold."
As it stands, there is no scheme in place to help these households, although it's understood there is a growing number of low-income people asking Work and Income for help with their energy bills. There is also no formula for when customers get cut off, with each retailer applying a different methodology.
However, a scheme that encourages people to use less power, called the Low User Tariff, caps fixed costs at 30 cents per day. The real cost of getting power to a home is about $1.30.
Mr Sargent says this has perversely tipped the financial incentive towards cutting power in winter when people need it most.
"It is wrong to incentivise energy conservation where health depends on it and not to heat a home in order to save power and money."
He is calling for the Government to introduce a concession scheme, which would give eligible households a discount on their power bills instead of giving discounts to those who can afford it.
The Australian state of Victoria already had one in place, he said. It offered households struggling to pay their bills a 17.5 per cent reduction.
- © Fairfax NZ News
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