Big power re­tail­ers un­fazed by com­pe­ti­tion

Nelson Mail - - BUSINESS - SU­SAN ED­MUNDS

New power re­tail­ers of­fer cus­tomers choice – but don’t ex­pect them to shake up the mar­ket, one com­men­ta­tor says.

There are now more than 40 re­tail brands in the New Zealand elec­tric­ity mar­ket, up from 22 five years ago.

But small and medium-sized com­pa­nies still only make up about 11 per cent of all con­nec­tions. Ge­n­e­sis En­ergy alone has more than a quar­ter of the mar­ket, while Con­tact En­ergy has just over 20 per cent and Mer­cury has just over 18 per cent.

Elec­tric­ity mar­ket com­men­ta­tor Ge­off Ber­tram, of Vic­to­ria Univer­sity, said the new en­trants were ‘‘do­ing what they set out to do’’ but he said they were never go­ing to be dom­i­nant and would not be able to make a se­ri­ous dent in the oper­a­tions of the big play­ers in the cur­rent mar­ket struc­ture.

He said the big firms were happy to al­low up to about 8 per cent of the mar­ket to be held by small providers but there was lit­tle hope of get­ting be­yond that.

‘‘They will never al­low an in­de­pen­dent to make a se­ri­ous dent.’’

Nova, the big­gest of the smaller play­ers, only has 4 per cent mar­ket share na­tion­wide.

Ber­tram said any real change would re­quire po­lit­i­cal will and new leg­is­la­tion to re­quire big op­er­a­tors to put cus­tomer in­ter­ests first. But with more mem­bers of the pub­lic hold­ing shares, due to the re­cent share­mar­ket list­ing of gen­tail­ers, that was less palat­able.

Ber­tram said a bet­ter dis­rup­tor of the in­dus­try would be so­lar power as the tech­nol­ogy to go ‘‘of­f­grid’’ and not re­quire a con­nec­tion at all be­came more eco­nom­i­cal and ac­ces­si­ble.

En­er­gy­clubnz, in which Stuff has a stake, is launch­ing in Welling­ton this week. Stuff also pub­lishes the Nel­son Mail.

En­er­gy­clubnz founder and chief ex­ec­u­tive David Goadby said he was pleased with the progress to date. It is al­ready op­er­at­ing in Auck­land and Christchurch, and ex­pected to be in Hamilton and on an­other eight of New Zealand’s net­works in the next few months.

Com­pe­ti­tion may be in­creas­ingly keep­ing pres­sure on prices. Prices rose 2.4 per cent for res­i­den- tial cus­tomers in 2017 as the lines com­po­nent in­creased 3.6 per cent. Prices fell in 2016.

In 2011, when there were half the cur­rent num­ber of brands, prices in­creased 6.6 per cent.

But Goadby said big re­tail­ers kept their best prices to of­fer to new cus­tomers. Those that had been with them for a long time missed out un­less they threat­ened to leave. ‘‘A lot of peo­ple don’t re­alise they can switch and don’t re­alise how easy it is.’’

En­er­gy­clubnz cus­tomers were typ­i­cally sav­ing be­tween 8 per cent and 13 per cent on their power bills, he said.

That was not al­ways re­flected in its Pow­er­switch rank­ing be­cause other re­tail­ers loaded up their of­fers on the com­par­i­son site so they looked more ap­peal­ing. Of­ten the deals were not avail­able to ex­ist­ing cus­tomers.

En­er­gy­clubnz passes on its own whole­sale price of power, plus a flat fee. Its model smooths out the move­ments in spot prices that comes with Flick and Paua to the Peo­ple’s sys­tem of pass­ing on fluc­tu­at­ing spot prices.

‘‘We ef­fec­tively give cus­tomers an ev­ery­day low price and man­age the risk on their be­half.’’

Elec­tric­ity Au­thor­ity chief ex­ec­u­tive Carl Hansen said, when re­tail­ers com­peted, it gave good out­comes for con­sumers.

‘‘Com­pa­nies are forced to in­no­vate on price and ser­vice de­liv­ery to win and re­tain cus­tomers.

‘‘A record 440,000 peo­ple switched providers in 2017. We en­cour­age every­one to check whether they’re on the best elec­tric­ity deal for their sit­u­a­tion.

‘‘We’re also work­ing to cre­ate op­por­tu­ni­ties where con­sumers have even more choice. At the mo­ment peo­ple are only able to have a con­tract with one elec­tric­ity ser­vice provider.

‘‘We’re look­ing to open this up so peo­ple may be able to buy elec­tric­ity from one provider, but sell ex­cess elec­tric­ity from so­lar pan­els to an­other, for ex­am­ple.’’

PHOTO: MARTIN HUNTER/STUFF

There are al­most twice as many brands in the New Zealand power mar­ket com­pared with five years ago.

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