Mighty River Power has defended its pre-paid energy service Globug, after it was criticised by an unhappy customer in the Otago Daily Times.
The Globug service is aimed at low-income customers and offers a discount for Community Service Card holders.
Earlier in the week, a South Dunedin couple hit out against Globug and claimed it cost them more than they were paying with their previous provider, Mercury Energy - which is also owned by Mighty River.
Following the publication of the story, several past and present Globug customers contacted NZME. News Service to tell their stories.
Christchurch solo mother of one Jessica Campbell, 26, said she had signed up for the Globug service in March on a promotion that gave new users a $50 credit.
"Every single time I top up, if I top up 20 I get a day and half and then I'm out of power," she said.
"We live in a brand new state house, the ones that they've just built. They're insulated but they're really, really cold."
One week she ran out of power four times and was unsure why it was running out so quickly.
Another Globug customer, Terri Hutchen, said she switched to Globug on May 25 and by June 16 had topped up $395.
The 28-year-old lives in Tauranga with her 28-year-old husband and their two children, aged five and eight, in a new home that is fully insulated with doubled glazed windows.
Before switching from Mercury, her average month power bill was $300 max, she said.
"I'm estimating that my average monthly bill with Globug is now going to be anywhere from $525 a month."
"We changed due to financial hardship and this is just unaffordable," she said.
Mighty River Power general manager customer James Munro defended the service as "socially responsible" and said it was the best product for those on low incomes.
"We've deliberately structured Globug to be at the cheap end to help people out who are on restricted incomes," he said
"The reality of the situation that was reported in the ODT the other day is that that customer has switched away to almost certainly pay several hundred dollars more a year."
Mr Munroe said that one explanation for recent customers' rising costs was a seasonal change.
"One of the things that can create a perception of increased cost is if you switch going into winter, of course you're consumption is going up at the same time."
Power usage could also be affected by faults with appliances or thermostats, he said.
He also said some customers had an initial debt to be paid for the period when power was supplied before Globug was fully set up, which was then paid back by a 25 per cent deduction from each top up.
This was the case for Ms Campbell, who said she now had $14 left owing.
David Marrra of Christchurch Budget Services said he recommended Globug to his clients, but the service was not for everyone.
"If people have a Community Services Card then the rates are comparable to or better than the best rates around," he said.
However, he said Globug wasn't right for households that were metered for night rates on hot water, which many low-end rental properties did not have.
"Just as a basic power supply, which a lot of low income people have, it is cheaper."
One advantage of the service was the ability for customers to monitor their electricity use as they paid for it, he said.
The pre-paid service also stopped vulnerable people getting into debt, he said. Post-paid power included an early payment discount, which he said turned into a penalty when users paid late.
"If you look at it being 10 per cent a month … over a 12 month period you're dealing with an interest rate or a penalty rate that is only comparable to the loan sharks."
Globug customers could also arrange to have debts from previous power companies paid off in deductions from their top-ups.
"We see people with huge debts to power companies and of course [they] are effectively making ten per cent per month on the debt," Mr Marra said.
"The energy market is a pretty awful place if you're one of the 50 odd per cent of New Zealanders who find themselves on a low income and its one of the primary needs that people have."
- By Eli Orzessek of NZME. news service