Prices up despite heating subsidies

BY TOM FITZSIMONS
Last updated 05:00 08/08/2009

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Heating and insulation companies are raising their prices because of a flagship Government scheme, even as their businesses boom.

In one case, an angry Lower Hutt customer discovered a government-approved provider had quoted him $200 more for a heat pump even after a $500 subsidy than it would have cost from a company that had not signed up to the Warm Up New Zealand scheme.

The companies say their prices have risen because of an increase in paperwork, audits and subcontracting associated with the scheme, trumpeted by the Government in May as a key part of its job creation plans.

They still support the Government plan, saying the subsidies mean consumers get a good deal.

But they complain that it has raised unrealistic expectations about what can be delivered at a time when they are swamped by demand and heating subsidies are running out.

The Government said in the Budget that it was investing more than $300 million to improve the country's poorly heated homes.

The scheme is administered by the Energy Efficiency and Conservation Authority (EECA), which approves local providers of insulation and heating appliances.

Homeowners are eligible for a grant of up to $1800, with Community Service Card holders eligible for an extra $1200.

The authority says it is asking all existing and potential providers to give pricing details in its current round of approvals and there are some "very ugly prices".

In the Lower Hutt case, a resident was quoted about $3500 for a heat pump by government-approved firm EnergySmart. The subsidy would have cut $500 off.

But when the man, who asked not to be named, called a rival firm, he was stunned to be told its standard price for the same model was about $2800.

"Someone is taking a lot of cream out of this, and it's from people who think they're getting a good deal," he said.

EnergySmart project manager Nathan Brown said it contracted out heat pumps to another firm, Temperature Solutions.

"We're going to be going straight back to Temperature Solutions right now and say, `This is the situation. We've been embarrassed. Your prices are too high."'

Temperature Solutions director Garry Quarterman said EnergySmart took a cut of the heat pump money. The price was also affected by the expert training of his staff, their quality products and suppliers' prices. Competitors had also been slashing their prices.

"It's not comparing apples with apples."

Consumer NZ testing manager Hamish Wilson said the case seemed a "bit of a rort" and he would expect the total price for the model to be no more than $3000.

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Mr Quarterman said his firm's prices had "definitely" gone up because of its involvement as a subcontractor in the scheme.

It had applied to be an approved EECA partner, but withdrew because it realised the extra costs would wipe out the value of the subsidy. "The paperwork is humungous. And someone's got to pay for that at the end of the day."

He was also concerned the Government had funded only 11,000 heat pumps this year when New Zealanders typically bought about 200,000 every year.

- © Fairfax NZ News

7 comments
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NIKKI   #7   11:34 am Jun 30 2011

I don;t get it!. Why on earth is the government promoting warmer, healthier and happier homes when those low income earners that do qualify for the subsidy can't afford to pay for extra power costs needed in order to use the dam heat pumps in the first place, let alone the $280 trailer load of fire wood if a wood burner is acquired. Its also great to hear that the government has funded for those of whom live in HZNZ properties and allowing tenants a choice of either a heat pump or wood burner. However, many of these tenants whom have chosen a heat pump have found there power bill has risen by an average $100 per month! Lucky for those tenants who have chosen a wood burner and have access to free firewood. These tenants can barely afford to put food on their kitchen tables let alone pay out for extra costs on heating. If the government wants to promote healthier homes then there should be something put in place to allow for extra costing to actually pay for the heating that is entering the new resource systems being provided within their homes.

eldeerlbloke   #6   11:15 am Aug 09 2009

I had my house insulation installed last year by Energy Options who provided ceiling insulation laid over the Batts I put in about 30 years ago. Underfloor insulation plus polythene sheet on the ground to keep soil moisture when it belongs- in the ground. Cost = Nil

I and my wife are both old , clapped out etc. types and very happy with the deal we got Got a heat pump installed 11 years ago when the Kent fire wore out. Now very snug and warm.

Bazza   #5   09:56 am Aug 09 2009

The Government insulation scheme is obviously a worth while project but only addresses one part of the problem. Air leakage in our homes can waste just as much or more heat as the lose through no insulation. Incorrect and uneducated use of most heating appliances can significantly increase your heating bill. To say that we will be better of and have lower power bills is a bit misleading without some way of measuring the difference. I have seen previous Government insulation jobs at friend’s homes and have not been impressed with the quality so I cannot see how they could have saved anything. The Government scheme also does not allow in its pricing insulation jobs that have a level of difficulty or time consuming so it is important to ask your local provider why they can’t do it and then seek independent advice and call the Energy Efficiency and Conservation Authority to clarify the issue. If we are to go forward as a nation and demand better quality and performance from Government backed schemes then we need to seek professional and scientific advice as to what’s on offer before making our decision.

Steve   #4   09:24 am Aug 09 2009

The government subsidy scheme doesn't work because of greed. Instead of being content with making good money from a scheme like this, there will inevitably be companies that will see this as an opportunity to hike their prices to make the discounted prices look attractive, thereby making even MORE money. We were quoted a figure to insulate our house which, after the subsidy, was higher than other companies quoted us before this scheme was ever mooted.

peter fox   #3   05:44 pm Aug 08 2009

Gov. subsidys are great but for many low income earners no spare cash is available for any home improvments at all, its a battle to survive in such an unbalanced economy that NZ has . For those on low & middle incomes the insulation of homes should be carried out by gov. workers or contractors free of any charge up front . Then a small levy could be applied to there electricity bill which should be covered by power saved . once the cost of the insulation is payed for the consumer would then enjoy lower energy costs .

milton   #2   02:59 pm Aug 08 2009

I think the Government subsidy for insulation is a good idea, but just like most Government initiatives, the implementation is bad. It’s a shame the Government doesn’t allow you to choose your own provider for insulation and heating. For example: The approved Government agencies for assessing and providing clean heating such as heat pumps, pretty much charge you the premium for a heat pump (Because they can-people have no other choice). But If I went to a place like Harvey Norman or Bond and Bond, I could get the same product for a cheaper price, and that’s without the subsidy. I could even take advantage of the sales they currently have and save even more, making it even more affordable. But No, we can't do that.

It’s a shame we don’t have a choice. As a result I suspect most people won’t take up the offer for getting heating installed because it’s so expensive getting it from the governments approved providers, even with the subsidy. However, it’s probably the Governments intention to do this, the less people who actually take up the offer, the less they have to pay out in grants.

I wish the rules for getting a grant for clean heating and insulation were as ‘Loose’ as the Government MP’s rules for claiming expenses.

joanne shanks   #1   10:24 am Aug 08 2009

Citing the government subsidy, Tararua council has withdrawn support for Tararua healthy homes; our quote for insulation has gone from $300 to $1800. I doubt we will be insulating any time soon, despite the frequent ice on the INSIDE of our house. I hope Nathan Brown does find the $10,000 needed to continue insulation subsidies for low income households, without extra subsidies many will continue to be out in the cold.

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