What’s the deal with prompt payment discounts?

Love ‘em or hate ‘em, prompt payment discounts (PPDs) are everywhere in the New Zealand electricity industry.

Well, just about everywhere.

Here at Pulse Energy, we don’t offer a PPD for one very simple reason: we build the discount directly into our upfront prices. This ensures that all our customers - including those on tight budgets who may not always be able to make PPD deadlines - are getting the very best bang for their buck.

Want to learn more about PPDs?

Read on to get a better understanding of how they work and learn more about why Pulse Energy doesn’t offer one.

What is a prompt payment discount?

A PPD is a conditional discount offered by some retailers. The details of a PPD can vary depending on the industry, but generally it means that the supplier will provide a discount if the consumer meets certain conditions as specified in their contract.

PPDs are widespread in the New Zealand electricity sector. An energy company that provides a PPD might agree to knock a certain amount (say, 10 or 25 percent) off your bill so long as you, the customer, hold up your end of the bargain (i.e. pay your power bill within a given time frame).

This might sound like a pretty sweet deal - after all, who doesn’t love a good bargain? But there are some issues with this type of pricing model.

The major downside of a PPD is that you’ll be charged at the non-discounted rate if you fail to pay your bill within the specified time frame. Of course, nobody intends to miss their PPD window, but it does happen - and when it does, it can put unnecessary financial stress on Kiwi families.

This has prompted some critics to say that PPDs are more about penalising late payers than rewarding prompt payers - and many New Zealanders agree. More than 1 in 5 (21 percent) Kiwis believe that a PPD is a penalty for paying late., according to the results of The Great New Zealand Energy Survey 2017.

Why does Pulse Energy not offer a prompt payment discount?

Unlike many other power companies, Pulse Energy does not offer a prompt payment discount. Instead, we integrate the discount into our pricing to provide a low price upfront for all our customers. We also provide transparent billing by itemising our charges, so you can see exactly what you’re paying for.

If you’re not able to pay your power bill by its due date, you’ll be charged a flat fee of $1 per day + GST. As you might imagine, this usually works out to be significantly cheaper than instantly adding an extra 10-25 percent to your power bill if you happen to miss the PPD window.

Weighing up your options

An electricity provider that offers a PPD isn’t automatically going to be better value than a retailer who doesn’t. By integrating a discount into our pricing model, Pulse Energy is able to offer very competitive rates without giving you excessive penalties for late payments.

It’s important to be mindful of the pros and cons of a PPD. Do your research, weigh up the benefits and take a holistic view of your energy needs before making an informed decision about your choice of power company.

For more information about our prices or to make the switch to Pulse Energy, feel free to give us a call on 0800 785 733 or fill out our online enquiry form and a member of the team will be in touch with you shortly.