EXCLUSIVE: HNZ & Globug combine to take advantage of people in poverty

By   /   July 15, 2015  /   30 Comments

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GloBug is a trap, perfectly created to take advantage of vulnerable, low income people. The company says so itself in the above articles.

I’m a state housing tenant, in Invercargill. State housing tenants get a quarterly newsletter, called “Close to Home”. Mine arrived in my letterbox today. Normally I don’t even open them, because the difference between what they say in them about our realities vs. our realities is just too infuriating.

Well, I’m glad I opened this one.

The theme of this newsletter is about power, keeping our kids healthy and how to keep our houses warm.

But before I even got to that, a flyer fell out. From Globug. Announcing a special deal made between HNZ and Globug for HNZ tenants.

Screen Shot 2015-07-15 at 8.02.35 am

Yes, really. Once I recovered enough from my disgust, I opened the newsletter. It begins by an editorial by HNZ’s CEO, Glen Sowry. It’s all about blaming us tenants for not getting HNZ’s attention about the poor condition of our homes.

‘A lot has been said in the media lately about the condition of our homes. As your landlord, we are committed to providing you with a warm, dry home. In the vast majority of cases we achieve this, but with 67,000 homes to look after nationwide, we rely on YOU to inform us of issues as they arise’. (Emphasis mine.)

Yes – because we tenants are responsible for HNZ not acting on repairs needed that are found in inspections, we are responsible for them not responding to our pleas on the phone, we are responsible for them not doing anything after our calls, and we are responsible for their contractors delayed and shoddy work.

Once I’d recovered from this second wave of disgust, I turned the page. It only gets worse:

Screen Shot 2015-07-15 at 8.03.27 am

A half page advertorial from GloBug, extolling its benefits – even managing to find a budget advisor to bolster their claims, and reminding us of the awesome deal available for HNZ tenants with GloBug.

Hilariously, it ends with a ‘disclaimer’: Housing New Zealand does not endorse or recommend GloBug.” So what adverb exactly would you use to call this then?

But this is awesome, some of you cry. What is your problem? It’s a great deal! HNZ tenants should consider themselves lucky to get this amazing deal.

The problem is, it’s all lies.

Coverage of GloBug began in 2012 with this warning from Consumer NZ:

Consumer New Zealand says it isn’t in people’s interests to pay in advance for power. … Consumer NZ testing manager Hamish Wilson said the consumer rights group suspected systems like Glo-bug might mean retailers became more aggressive about channelling customers towards pre-pay.

It was also concerned by planned increases in power prices. “All of this is about making life easier for the electricity companies to do what they already do very well, which is effectively plunder people’s bank accounts. We don’t think pre-pay is in the best interests of most of the people who are likely to end up on it,” he said…. pre-pay customers pay on average 10 per cent more for electricity than post-paid customers receiving a “prompt payment” discount.

Wilson said that was unfair. “If you are paying in advance, you are paying very promptly aren’t you? Plus, electricity companies have taken the money in advance, so there is a small opportunity cost of not having that money in a savings account generating some interest.”

Recent stories from June in the Herald from state housing tenants who switched to GloBug are highly alarming:

A South Dunedin family is warning low-income earners about their power struggle after switching to pre-paid electricity supplier Globug. Labourer Matthew Lane said he had paid a monthly Mercury Energy power bill for about seven years.

The cost for himself, partner Tamara Smith and their 7-month-old baby Jaxon in their St Kilda home was usually between $120 and $150 a month.

The one-income family switched power companies last month after being lured by a promise of cheaper pre-paid electricity from Globug. ”Paying the power bill wasn’t a problem. I joined Globug because it was a deal that sounded too good to be true.”

Globug and Mercury are both owned by Mighty River Power.

When the family received the pre-pay device, they bought $50 of power and the device glowed green. ”But within three days of topping it up, it had gone amber,” Mr Lane said. The device glowed amber to warn the power would be disconnected at noon the next day. If the device glowed red, the power would be disconnected at noon the same day. The family topped up another $50, but three days later it glowed amber again.

The family used power to run a small heatpump, a fridge/freezer, a washing machine and a television. To save power, the family showered every second day, did not use their bath and did not understand why the prepaid electricity was used so quickly. The family did not have $20 for the minimum top-up payment, the device glowed red and the power was disconnected.

”I’m putting a warning out there for low-income families. A lot of people can’t pull $20 out of their back pocket,” Mr Lane said.

Globug declined a request by the family to top up $10 for some heating.

The family asked to disconnect from Globug and be switched back to Mercury. However, after disconnecting, Mercury declined to reconnect the family, saying it did not meet its credit criteria. Mr Lane said he had a clean credit record but had a black mark with Mercury for disconnecting from Globug.

The family called Genesis Energy on June 2 asking to be connected and were told they passed the credit check but it would be June 10 before they could receive power, as the company had a stand-down period with Globug.

The family was left in limbo with a 7-month-old baby and a cold house, as heavy rain fell outside, the family still without power and the money to top up. The next day, the house was flooded. Friends housed the family until Genesis could connect the power and the stormwater drained away.

And more:

Following the publication of the story, several past and present Globug customers contacted NZME. News Service to tell their stories.

Christchurch 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. Ms Campbell said she had taken measures to conserve power.

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 29-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.

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 metered for night rates on hot water, but low-end rental properties often were not.

 

Few of you will be surprised to know that most HNZ houses, and most low income housing are on night rate meters.

So, HNZ – was this really a good idea? Because I’m hearing stories left right and centre of people finding Globug hideously expensive, and getting off it and managing to get into another power company or plan afterwards almost impossible.

GloBug is a trap, perfectly created to take advantage of vulnerable, low income people. The company says so itself in the above articles.

By the way, go have a look at the T’s & C’s on the Globug website. That $100 credit is almost gone on fees before you even get connected. There are heaps of unmentioned fees – to top up, to check your balance – even the advertised child-mesmerising, almost electronic-babysitter device costs $70. And if you still have credit on your Globug when it’s gone red and you don’t top up? It’s gone.

This is gross irresponsibility from Housing New Zealand.

 

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About the author

Rachael Goldsmith (B.App.Med.Arts – Journalism, Nat.Dip – Human Resources, Nat.Cert – Social Services) is a writer & social justice activist from Invercargill, Southland.

30 Comments

  1. Thank you for this, Rachel.

    Hopefully word will spread, and if people search the net for information on Globug, your story will come up.

    It is disturbing to see a private company advertising in a HNZ newsletter – even with the so-called “disclaimer”. Regardless of HNZ’s assertions on non-endorsement, that is precisely how some HNZ tenants will view it.

    I wonder how much Globug paid for that advertorial?

    • Mike says:

      You know its a bad day when you find me agreeing with Frank! There’s no getting past the fact this is bloody shocking. It’d be interesting to know which other power companies had a standdown with Globug as well, if nothing else, so that if people want to leave Globug, where they can go.

    • Hi I have jst signed up with Glo Bug last week,
      I am waiting for the machine to arrive in the next 2.5 weeks.
      An been told by the Rep what ever power i used wen machine comes will get added to my new bill,after reading this I wil be ringing tommorow to cancel .All this was advised by the Budgetor in the Napier Winz Office.

    • Z says:

      I see no issue with a paid advertorial. HNZ is afterall has an expectation upon it to *profit* now.

      However I’d expect any such advertising to be a genuine good deal. It doesn’t take long to Google FFS

  2. wanafli says:

    Isn’t Mighty River Power a SOE? I know Genesis is. Is this another way that JonKey is attempting to crush the poor?

    • J S Bark J S Bark says:

      He’s bloody well succeeding isn’t he?

      The prick…

      Don’t bean counters make wonderful leaders… NOT.

  3. Merc says:

    It’s a sad day when a power company are trying to offer customers control and cheaper power.

    Good to see some people will find fault regardless.

    • You clearly haven’t read the articles. Get your last power bill. Enter the amounts into a comparison website that includes GloBug. It is not controlled, and it is not cheaper.
      I did exactly that – I am on Control Pay, with Contact, with a prompt payment discount and online bills. Globug would increase my power costs by a THIRD.

    • Stuart Munro says:

      It’s a sad day when power companies even exist.

      Destroy them! Take our stolen public resources back! Power to the people!

    • Merc – it’s a sad day when you haven’t read Rachael’s story properly.

      Sad to see people like you finding fault regardless.

    • K16 says:

      Pathetic Merc. You obviously are an ignorant fool. Read the story first before making such dumb comments.

  4. Mike the Lefty says:

    Some of the new electricity providers sell power to consumers based on the market spot prices. I think Globug is one of them. This means your power may be cheaper on some days and dearer on others, depending on demand and supply. Consumer Powerswitch notes that caution is needed before signing up to such a provider. At the moment with wholesale electricity prices relatively low because of low demand and oversupply, this might look attractive; but if the conditions are reversed your bills could skyrocket.
    Pre-paid electricity usually means no contracts and no deposits. It can be useful for flats, or for people who use very little power most of the time because you can more easily track your power usage and have no frightening power bills each month. However for families and larger households it costs a lot more than a regular contract and should be avoided.
    About 9 years ago I moved into a flat where there was a pre-pay meter. When I did the sums I found I would be paying something like 60% more a month so I just ignored it and signed a regular contract with another company.

    • J S Bark J S Bark says:

      I did not realise one had that option. I thought if a pre-pay meter was installed one HAD to use it.

      That’s worth my remembering, thanks.

  5. Liberty4NZ says:

    Rachel, our family struggle with our power bill most of the time due to low income. Quite regularly we pay late although haven’t yet been disconnected. Mecury Energy tried some heavy-handed tactics to switch us to Glo-bug, wording their letters to us, to suggest we had no choice and refusal would lead to disconnection. There was one word that gave their game away, the word ‘may’. Long story short the letter stated so and so will be around on x date to change your meter and refusal to let them do so MAY result in disconnection. That in itself suggests they are getting some resistance!

    I knew then they could not do so without consent. I contacted Mercury Energy and after speaking to several people who were adamant I had no choice, I spoke to a manager that accepted I did not consent to Glo-Bug. Friends, do not be bullied by corporations. I suspect the same applies to HNZ tenants, it is none of HNZ’s business how you pay your power. Incidentally, I haven’t heard another thing about it and I’m still often late with my power bill due to lack of funds, hard as we try.

    The bottom line is the power company requires your consent to change your meter. If you do nothing when you recieve a letter such as this it implies that you consent. I strongly advise, if this happens to you, that you put it in writing to the power company, with the words, I DO NOT CONSENT. Just a bit of a bush lawyer that was right on this occasion.

    • Alastair says:

      Careful, Globug (And Smart Meters Don’t work everywhere. They rely on the 2 Degree Network, the smallest and most unreliable of the 3!

  6. I want testimonials from all of the people out there who have had experiences with signing up to globug. GOOD OR BAD OR IN BETWEEN. everything. I’m going to put these in a blog for everyone to read, real talk, real information from one real person to another.
    Glo.or.no@gmail.com

  7. Marcus says:

    Housing NZ have a disclaimer at the end where they say they don’t endorse any Globug products, but when you sign up and put “HNZ” as a promo code you get a $100 credit. It doesn’t take a rocket scientist to work out what “HNZ” stands for so why do they tell us such b..s? I guess this is what you should expect from any govt department under a National government.

  8. kingi says:

    The Daily Blog should set up an annual award for the worst power company. Call it the Max Bradford award.

  9. Shona says:

    Globug rang me today . They are targeting Northland at the moment. Why they thought I fitted their profile I don’t know. Told them to fuck off.

  10. Shona says:

    Doh! Just worked it out , my area is predominately populated by Maori.
    Predatory scum.!

  11. wild katipo says:

    Butt covering and scams all in one. Wow !

    Welcome to the American dream.

  12. Kingi says:

    Well done Daily Blog for breaking this story. No mention of it yet on the telly. Hello?? Helloo?? Anybody there?? This is the kind of story Campbell Live would have run with.

  13. K16 says:

    The fact that HNZ is teaming up with this stupid globug company is the worst. They can say in their disclaimer that they don’t endorse this company… But when the company offers you money to sign up… That means there is a deal going on between HNZ and globug…

    I have seen people complaining that HNZ don’t complete their repairs or maintenance on time… And this fool has the nerve to try and shift the blame… I deal with a boss like this in Australia… He always stuffs everything up… But always pushes the blame to someone else.

    HNZ are the worst and this Glen Sowry [Offensive text deleted. That is not acceptable, K16. – ScarletMod]

  14. iain mclean says:

    There is only one solution for people on low or fixed incomes to
    remove the stress and headache of predatory power prices.
    It is called Smoothpay-Genesis-or it’s equivalent.

    They will average your power use over 12 months so you pay a fixed
    amount each payday.
    You will build up credit in summer months and be in debit in winter and still be eligible for the prompt payment discount.
    One bill less to worry about.

    But it can only be done with a debit payment and not AP’s.
    ie they take the money,not you give the money.
    You cannot miss a payment otherwise the bank will charge approx $20.
    Set up a 2nd account just for this purpose so the money is always
    there and get the bank to divert every payday to this account.
    I add $5 to the set amount to cover any fee’s and over time you
    may end up with a small surplus for any emergency. (more?)

    My o2 is set up NOT to be accessed by your EFTPOS card although
    you may transfer to your working account by phone.

    Set this debit the day AFTER your payday to allow for any glitches.
    (and in any REAL emergency there is money available)
    Problem solved.

    This is a great Scoop,Rachael,well done. Excellent lay out.

    Populations worldwide (west anyway)are being attacked from all sides and the poor and low incomes always suffer the most.
    Gvt’s and authority are NOT benevolent anymore. Eugenics anyone?

    God Save the Queen! (yeh right)
    Cheers.
    PS;Never ever allow a smart meter in or on your home.

    • If you’re referring to LevelPay, that’s from Meridian, and I advice caution using it. It is not always well calculated, and you can end up with a considerable debt if the LevelPay amount builds up and you haven’t noticed.

      One household incurred a debt of over $400 before it was noticed, and it took considerable action before Meridian agreed to credit about $340 of the debt. (There’s more to it, and I may write up a blogpost about it, one day.)

  15. J S Bark J S Bark says:

    Get your MP or the Labour/Green/NZ First housing spokesman to ask for an explanation of the relationship between HNZ and GloBug during question time in Parliament. Ask if it is an endorsement. I’ve just got to remember who the spokespeople are…

  16. Stuart Munro says:

    Anyone living in HNZ need to be warning their neighbours about globug. They can’t afford to be shafted – and when communities stand together shitty companies and even bad governments fall.

  17. power industry worker says:

    OK. Heres a few of my thoughts..

    I work for one of the companies contracted by GLOBUG to install/configure their meters (as well as the smart meter rollout). First of all I would be wary about getting a smart/globug meter installed in the first place, as the technicians who install them are largely poorly trained migrant workers who are pressured to a certain amount of installations each day, and are questioned if they take too much time at a particular job. Meaning mistakes can be made, and are — nearly every day, my company has had reports of properties having only part power, or no hot water, due to installations tripping out breakers, etc, in extreme cases, this had led to pole fuses blowing. Which is why I canceled when I signed up with globug. When I signed up, I was led to belive that I wouldnt need anything done to my smart meter, but when I got a letter saying that my ‘meter may need to be changed’ I was on the phone to globug, getting them to confirm if my meter would be changed, and sure enough it was, though apparently a ‘globug’ interface will be clipped onto it. I cancelled, because I did not want anyone coming round and mucking round with my meterboard, possibly blowing my solar water heating system in the process (among other things…).

    There are a few other issues I have with globug, such as the fact that while individual units were cheaper than with, say Genesis, the fixed daily charge was higher, there were all sorts of fees charged to top up, and the 0800 number is not able to be phoned from a cellphone (which is silly seeing that most of those who are targeted wouldnt have a landline).

    IMO power is way too expensive, but GLOBUG should only be used as a last resort.

    HNZ are better off ensuring that its residences have woodburners and wetbacks were possible, along with a dry place to put firewood.