Spot-price pain easing, says Flick
Flick customers have paid about $56 more so far this winter than customers on traditional power retailers’ models, the company says.
Flick passes on wholesale prices to its customers, plus a margin. These spot prices move according to supply and demand.
When hydro lakes are full and demand is low, spot prices are also low. But during periods where there is less rain, lower lake levels, and more demand, prices jump substantially.
New Zealand is currently in such conditions: For the first time since 2008, inflows of water into South Island storage lakes are well below average.
In the North Island, Genesis Energy is using its coal stockpiles, running its Huntly power station units on a 60/40 combination of coal and natural gas.
Flick chief executive Steve O’Connor said in the week of July 10, spot prices had averaged about 21 cents per kilowatt-hour, the worst sustained prices since Flick started three years ago.
In early June, they were about 11c/kWh, on average.
‘‘Sustained events like this are very rare and even though we’ve had a few big spikes in the past, never higher prices that have lasted so long,’’ he said.
‘‘However, with last week’s wet weather the average spot price came down about 12cents/kWh, and this week prices have dropped again to 10cents/kWh.
‘‘With more rain and snow forecast down south and hydro storage increasing, back up at 65 per cent of average, from a low of 59 per cent, we believe prices are starting to turn a corner.’’
He said the higher bills had been hard on customers.
‘‘On the whole they have been really loyal to the model, knowing they are better off [in the] long run.
‘‘We are doing everything we said we would when customers, commentators and the regulator asked us how we would support customers in [a] dry winter.
‘‘We are educating them about the situation, communicating openly and honestly, providing tools to help them manage their costs, and making it easy for them to leave.’’
More customers had left – a combination of those who would come back once price conditions settled and those who decided the model was not for them.
‘‘On average customers have paid $56 more with Flick this dry winter than they would have with their old retailer. When you compare that to about $500 average savings in 2016 alone, the model still makes sense for consumers.
‘‘So, we’ve been the victims of our own success in some ways. Prior to dry winter setting in, we’d delivered 102 weeks of consecutive savings so Flicksters had got used to very low bills. As their bills have lifted we’ve had to help them understand that they are still better off in the long run.’’
Consumer NZ chief executive Sue Chetwin said Flick had had a ‘‘hectic’’ time dealing with customers.
‘‘Most of their customers aren’t used to increased prices as they have had years of the lakes being full and competitive wholesale prices. As you can see from the weather, the lakes will be filling.
‘‘Other spot prices retailers will be doing it tough too. I suspect it will be short-term.’’
Paua to the People also offers the spot-price model. OPINION: The Employment (Pay Equity and Equal Pay) Bill was introduced into Parliament this week. If passed, the legislation would address the problem of an employee not being paid what their job is worth.
It would be invoked in a situation where an employee considered their job was of equal value to someone else’s, but the pay was unequal.
It could also be used where a class of work was carried out by mostly female workers who considered they were being paid less than a mostly-male workforce doing work of the same value.
Business fully supports the concept of equal pay for work of equal value.
The pay equity bill was created as result of a consensus between business, unions and government.
All parties signed up to this approach for agreeing on which jobs are equal to which.
The approach will let an employee bargain for a pay increase, based on a comparison with another person’s job – the comparison will be the way of finding out which jobs are of equal value.
Close comparisons within the same industry will have a better chance of finding equal value.
For example, a paediatric nurse would be more ‘‘equal’’ to a geriatric nurse than to a security guard.
A bank security guard would be more equal to a nightclub security guard than to a nurse, and so on.
Unfortunately, while the approach that created the pay equity bill bill was based on consensus, some cracks in that consensus are now beginning to appear, with some unions criticising the comparison process as too rigid.
It seems the unions would now prefer a much broader process for
The vast majority of businesses in New Zealand are small businesses, so the pay equity process needs to be manageable for them.
finding equal value – a process that would allow entirely different jobs in different industries to be categorised as equal.
Under this approach there would be the potential for industry-wide wage claims on behalf of nurses, security guards or other entire groups of employees.
Nationwide industrial action was not what was envisaged as an outcome of a pay equity process.
The pay equity process was devised with both large and small business in mind.
The vast majority of businesses in New Zealand are small businesses, so the pay equity process needs to be manageable for them – a pay equity process that escalated into nationwide industrial action wouldn’t be helpful for either small business or its employees.
So, business would like to see the pay equity processes implemented as set out in the legislation, and would like to see a workable system in place to achieve that.
It’s also worth saying that business would like to see the end of female-dominated jobs (the pay equity legislation was prompted in part by the wage claim brought by Kristine Bartlett on behalf of predominantly-female aged care workers).
There is no good reason why jobs such as aged care should be dominated by women.
Business would like to see young women and girls receiving better careers advice and making study choices that open doors to a much wider range of occupations.
Better careers advice and different qualification choices would mean that classes of work would be less likely to be dominated by a single sex, breaking down the incidence of both female-dominated and maledominated industries.
I see the pay equity bill as a good step towards addressing any injustices that may have occurred in pay for women or men, and would urge all parties to the agreement to work together constructively to find the remedies for any such injustices.
Businesses concerned about how the new legislation might work in practice may wish to seek help and advice from BusinessNZ or regional business associations EMA, Business Central, the Canterbury Employers’ Chamber of Commerce or Employers Otago Southland. Kirk Hope is the chief executive BusinessNZ.