Low Fixed Charge Ends 1 April 2027: Will Your Power Bill Rise If You Use Little Power or Have Solar?

If you are on a "low user" power plan, the rules that force retailers to offer one are scheduled to end on 1 April 2027. That matters most to people who use very little electricity, and it matters to some solar owners too, because a solar home often looks like a low-use home on paper. This article explains what the rules are, what changes, who is most exposed, and what to check before April.

At a Glance

• The date: The Low Fixed Charge phase-out is scheduled to be completed on 1 April 2027, when retailers will no longer be required to offer low user plans. That is the current schedule, and any regulation can be changed by a future government.
• What goes: The cap on the daily fixed charge for a "low user" plan, and the requirement that retailers offer one.
• Who is most exposed: Very low-use households (single people, small apartments) and solar homes with a small net import from the grid.
• Who may benefit: Higher-use households, who have been paying more per unit on standard plans.
• Solar still pays: But the way you should compare plans changes. Our worked examples below are illustrative, not quotes.

What the low fixed charge rules actually are

Your power bill has two parts: a daily fixed charge (you pay it whether you use power or not) and a variable charge per kilowatt-hour (kWh) of power used. The Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations require retailers to offer a "low fixed charge" option with a capped daily charge, in exchange for a higher per-kWh rate. According to Powerswitch, low user plans are generally best for homes using less than 8,000 kWh a year, or 9,000 kWh in the lower South Island. Retailers such as Meridian use the same thresholds, and only offer the low user option at your primary residence, not a holiday home or sleepout.

The idea was simple: if you use little power, a low daily charge and higher unit rate usually costs less than a standard plan with the reverse.

How the phase-out has worked, year by year

In September 2021 the government decided to phase the rules out over five years. The maximum daily fixed charge for a low fixed charge option has stepped up by 30 cents each 1 April:

Source: Powerswitch, summarising the phase-out schedule. The cap is a ceiling. Retailers can and do charge less, and MBIE's mid-point review, as reported by Scoop, found fixed charges had not risen to the maximum the phase-out allows.

So the bumps have been happening quietly for years. The 2027 step is different in kind: it removes the cap and the obligation altogether. As 1News reported on 19 October 2026, the scheme will be fully phased out from 1 April next year.

What happens on 1 April 2027

Three things change in principle:

1. Retailers no longer have to offer a low fixed charge plan. Some may keep offering low-use plans as a commercial choice; some may not. We do not know yet, and you should treat anyone who claims to know exactly what plans will look like as guessing.
2. There is no regulated ceiling on the daily charge. Plans will be set by competition and each retailer's costs.
3. Fixed costs are likely to matter more. Part of your daily charge covers lines (network) costs. 1News reports lines charges are around a third of the average power bill and stay the same however much power a household uses. The Electricity Authority's August 2026 data shows lines charges made up 54% of the average 6.8% price rise in the first half of 2026. Wider price pressure is already large, independent of this rule.

What we cannot say is how much any individual bill will change. That depends on your retailer, your network area, and the plans offered after April.

Who is hit hardest

MBIE's mid-point review, as summarised by Scoop, looked at the effect of the phase-out so far. Its findings, in brief:

• Households using under 6,000 kWh a year saw bill increases from the phase-out; those using 6,000 to 7,000 kWh were roughly neutral; those above 7,000 kWh saw average decreases.
• Around 45% of households saw average decreases and about 40% saw increases. Of those with increases, 72% saw rises under $104.
• Single-occupancy households in the lowest income quintile saw the largest relative impact.
• Wider factors, such as wholesale prices and network costs, had a larger effect on bills than the phase-out itself.

Translating that: the households most likely to feel the 2027 change are single-person homes and small units, plus solar homes where the panels cover most daytime use. That last group is the one many solar buyers do not think about.

Why solar homes are in the firing line

A solar system cuts the kWh you buy from the grid. It does not cut your daily fixed charge. So after you go solar, your bill leans more heavily on the fixed part. A home buying 3,000 kWh a year from the grid with solar looks, to a retailer's pricing, like a very low-use home. Today many such homes sit on a low user plan with a small daily charge, which suits them.

Once that option is no longer mandated, you cannot assume it will be there. That is the real risk for solar owners: not that solar stops working, but that the plan structure best suited to your new usage pattern may become harder to find.

Worked examples (illustrative assumptions only)

These are made-up round numbers to show how the maths behaves. They are not real retailer prices and not a forecast. Use Powerswitch for real plans in your area.

Assumed plans (all-in, GST included):

• Low-user-style plan: $1.50/day and 32c/kWh
• Standard-style plan: $3.00/day and 26c/kWh

Example 1: a small, low-use home (4,000 kWh/year)

Here the low-user-style plan wins by about $307 a year. Now suppose, after the rules go, the low-use plan on offer is $2.50/day and 30c/kWh: that works out to $912.50 + $1,200 = $2,112.50, a gap of about $22. Same house, same behaviour, most of the saving gone. That is the shape of the risk, and the size will depend on real post-April plans.

Example 2: a solar home

Say a home uses 7,000 kWh a year in total and its solar covers 2,500 kWh of that directly, so it imports 4,500 kWh.

• Savings from solar self-consumption at 32c = $800 a year
• Savings from solar self-consumption at 26c = $650 a year

So on a plan with a lower per-kWh rate, solar saves less per unit, here about $150 a year less, even though your bill may be lower overall. Moving from a high-unit-rate plan to a high-daily-charge plan does not make solar pointless, but it shrinks the value of each kWh you generate and use. For export, a typical solar home also gets a buy-back rate that is lower than the rate it pays. See our payback analysis for real-world self-consumption numbers.

The lesson is not "avoid solar". It is that payback calculations built on today's plan may be too rosy or too gloomy for 2027, so run them against more than one plan.

Does solar still pay off?

Yes, for the right home, but the maths shifts in three ways:

1. Self-consumption matters more. Every kWh you use from your own roof avoids buying a kWh at the variable rate. Hot water timers, heat pump scheduling and daytime EV charging all push self-consumption up.
2. Batteries and time-varying rates get more interesting. Time-of-use plans and time-varying buy-back rates, covered in our explainer on time-of-use solar buy-back, reward using or exporting power at the right time. A battery lets you shift solar into the evening. Whether it earns its cost is a separate question, and we ran the numbers in are solar batteries worth it.
3. The upfront price is unchanged by this rule. If you are weighing a system, our solar panel cost breakdown is the place to start, and our complete solar panels guide covers sizing and installers.

What to do before April 2027

1. Find your real annual usage. Add up 12 months of kWh from your bills or your retailer's app. If you have solar, note both what you import and what you export.
2. Check what you pay now. Note your daily charge and per-kWh rates, and whether you are on a low user plan.
3. Compare on Powerswitch. Enter your actual usage and compare both low-user and standard plans. Repeat the comparison in early 2027 once retailers publish plans for after 1 April.
4. Ask your retailer directly. Ask whether your plan changes on or after 1 April 2027, and when they must tell you.
5. Test your usage pattern. If you can shift load to cheaper time-of-use periods, a time-of-use plan may beat a flat plan regardless of the LFC change. Our piece on running a heat pump on time-of-use power shows how.
6. Re-run solar numbers before buying. Use our savings calculator to test a few plan scenarios, and when you are ready, get quotes from solar installers and ask each to model your system against both a low-fixed-charge-style plan and a standard one.

The bottom line

The cap on low user plans has been rising for five years, and the phase-out is scheduled to finish on 1 April 2027. For most households the effect will be modest next to the wider price pressure from lines and wholesale costs. The households with the most to lose are very low-use homes and solar homes with small net imports, because they have been the main beneficiaries of a low daily charge. Do not panic and do not sign a long solar contract on assumptions about plans that do not exist yet. Check your usage, compare real plans, and revisit once retailers publish their post-April options.

This article is general information, not financial advice. Regulations and retailer pricing can change; confirm current details with your retailer, Powerswitch and the Electricity Authority.