NZ’s Big Power Companies Scramble to Keep Customers

As New Zealand’s electricity customers continue to switch power retailers for more competitive rates, bigger power companies are working hard to keep existing customers and attract new ones.
Published: Sun 07 Oct 2012

What happened                                                     

New Zealand’s large power companies are turning to more aggressive tactics to retain or win more customers, writes Switchme.This is in response to the thousands of Kiwis who are switching to smaller, more competitive power companies. Some of these companies are offering customers a three year contract with fixed rates and others are offering money on their power bills to get customers to stay.

Background

Figures show that over the past year, one in four power customers have switched their power companies with the aim of saving on their electricity bills. The first half of 2012 saw almost 180,000 switch to a new retailer. February 2012 alone saw almost 36,000 customers switch, reports the country’s Electricity Authority. As a result, five of the biggest retailers lost 4,700 customers. Last year, 388,000 switched, saving a total of about US$7.1mn (NZ$8.7mn.)

State-owned Mercury Energy reported one of the biggest losses of consumers, mainly as a result of it announcing a 5.8% increase in electricity tariffs from April this year. The year before saw the company lose 6% of its customers.

According to a World Energy global study, New Zealand is ranked second when it comes to consumers switching power companies.  This is thanks mainly to comparisons service such as the Electricity Authority’s residential “What’s My Number” campaign and “Switchme” which offer free energy comparisons. [Read: Shape Up or Step Aside: NZ Electricity Consumers Gain Power]. The Electricity Authority Chief Executive, Carl Hansen, says that the extra pressure placed on electricity companies to offer cheaper rates, has made the energy industry much more competitive.

The Electricity Authority has now launched a free comparison tool, the Request for Pricing (RFP), for businesses to encourage them to switch and therefore create more vigorous competition within the electricity market. Only 22% of SMEs have switched electricity provider in the past two years. However, 80% of those who have switched say they found it easy. The on-line tool gives SMEs the opportunity to enter their business and consumption details online. Retailers are then provided with this information and asked to tender. Electricity retailers then submit a tender and businesses are then able to switch from there. The pricing responses from the tool have an average spread of 17% which represents significant value for SMEs to shop around for their electricity.

Powershop’s chief Ari Sargent says of the larger power companies’ tactics: “As soon as you attempt to switch power companies, they throw everything they have at you to stay. For a growing number of people, it’s a case of too little, too late.”

Sources                                                                                                                             

Consumer-Mercury Energy fixed price plan

Switchme-Mercury Energy Losing-Small Power Companies Gaining

Switchme-NZ Ranked Second for Switching Power Companies

The New Zealand Herald-Power of reasons for SMEs to consider switch

The New Zealand Herald-Smaller power companies show up larger competitors

The New Zealand Herald-Thousands switch to smaller power firms

TVNZ-Competition healthy in NZ’s electricity market

3 News-Mercury Energy customers face $100/year price hike