The end of low user plans, and what changes in April 2027

For about twenty years, choosing a power plan in New Zealand has started with a question that has nothing to do with the retailer: are you a low user or a standard user? That split is not a marketing device. It is a regulation, and it is on its way out.

What the regulation does

The low fixed charge rules cap the daily charge a retailer may charge a qualifying low-usage household. Because retailers still have to recover the same costs, the money moves into the unit rate instead. So a low user plan looks like a small daily charge and a high price per kWh, and a standard user plan looks like the reverse.

That design does what it was meant to do — it rewards using less — with one awkward side effect: the crossover point is invisible unless you know your annual usage. Plenty of households sit on the wrong side of it for years.

Qualifying means using under a set annual threshold: 8,000 kWh in most of the country, with a higher figure in some southern regions where more of the year is spent heating.

What is changing

The cap is not being switched off overnight. It has been stepping up each 1 April, so the "low user" daily charge has been climbing towards the ordinary one for several years already. In April 2027 the regulations go entirely. After that there is no regulated low-user daily charge, and the daily charge on any plan is whatever the retailer sets.

The practical effect is that the label stops meaning anything. Plans do not become identical. The spread between them is likely to widen, not narrow, because the constraint that pushed them into two recognisable shapes is gone.

What it means for you

If you use a lot of power, very little changes. You were probably on a standard plan and its economics were never governed by the cap.

If you use very little power, a small flat, a single person, a holiday house, someone with solar — you are the household the regulation was written for, and you are the household that feels it going. Your daily charge has been rising annually and the rise continues to the end of the phase-out.

If you are somewhere in the middle, the honest answer is that you need to compare on total annual cost rather than on plan labels, which is what you should have been doing anyway.

What to actually do about it

1. Find your annual kWh and write it down. It is on your bill. After 2027 it is the only number that lets you compare two plans properly, and it is the number that tells you which side of the crossover you are on today.
2. Do not panic-switch. While the cap exists it is still worth having if you qualify.
3. Re-check when your plan renews. Fixed terms signed before the change will run out into a market where the shapes are different.
4. Watch the daily charge, not just the unit rate. As the cap comes off, the daily charge is the line that moves.

Why we are writing about this now

Most of what is published about low user plans in New Zealand was written before the phase-out was decided, and reads as though the split is permanent. It is not, and the date is close enough that a household signing a multi-year fixed term today will be inside the change before it ends.

We compare 8 power companies. We do not publish plan rates yet, because we do not have verified rate files from the retailers. When we do, the fixed and variable halves will be shown separately, which is exactly the distinction this change makes matter more.