Wellington, New Zealand — (METERING.COM) — March 18, 2013 – Households with children in New Zealand that use prepayment meters to pay for electricity experience greater levels of economic hardship, according to a new study from researchers at the University of Otago, Wellington.
Problems reported by families running out of credit, or ‘self-disconnecting’, included not being able to heat baby’s bottles, cook for or bathe their children, and increased family tension.
The study, which was published in the New Zealand Medical Journal, was aimed to investigate the advantages and disadvantages of using prepayment metering, and was conducted in cooperation with three major electricity companies.
It was based on two nationwide postal surveys in late 2010 and a follow up in 2011.
Based on the most recent national figures, about 28,000 households with children are estimated to use prepayment metering for electricity. About 60 percent of these have one or two children and 40 percent have three or more children living at home.
According to the study, households with children were more likely to cut back on grocery spending to afford electricity, and they indicated greater financial hardship than other households.
Most of these households also experienced cold indoor temperatures, being more likely to report seeing their breath condensing indoors on at least one occasion during the winter.
Prepayment metering, predominantly used by low income households, was also found to be the most expensive way to buy electricity.
To address these issues the study highlights that regulatory reform of prepayment metering could reduce the burden of fuel poverty in New Zealand by protecting consumers against some of the pitfalls, while harnessing the advantages of prepayment metering. These advantages include increased awareness of household electricity use and the reduced risk of bill shock when an unexpectedly high monthly account is received.
“We urge the government to address the problems we’ve identified with prepayment metering before any asset sale of power companies, which is likely to increase prices and fuel poverty, especially for this group,” said Kimberley O’Sullivan, lead author of the study from the University of Otago’s Department of Public Health.
Around 25 percent of New Zealand households are believed to be suffering fuel poverty – defined as spending 10 percent or more of household income in adequate energy services.