Flicking switch on lower bills
If everyone switched to the best-priced power option, Kiwis could save around $280 million, Rob Stock reports.
Jeanie Stewart decided enough was enough when an $800 monthly power bill landed on her doormat last year. So she went on to the Powerswitch website, which lets people check if they are getting the cheapest power they can.
Stewart says: ‘‘The cost of my bills was horrendous at certain times of year. I run a slightly larger house than is typical. It’s double level, has a granny flat and a pool.’’
Powerswitch, which is run by Consumer, showed electricity industry newbie Flick Electric came out cheapest.
Flick’s been in business for two years, and runs on a very different model to other electricity providers.
Traditionally, providers create bundled power plans – homeowners pay a price, never knowing what the electricity retailer is paying for the power it sells them.
Flick’s different. It charges fees to customers, but when it comes to the power, it just passes on the wholesale price.
The savings come because the wholesale price is way below the prices homeowners are usually charged for power by other retailers, though the spot price can bounce around bringing some risk. The Electricity Authority’s website has a useful guide to ‘‘spot-price’’ contracts.
The advantage of buying at the spot price is that when they are low, power-users pay substantially less for electricity than they would on a traditional retail contract where the price never varies.
But, it says: ‘‘If spot prices increase above the flat rates charged by retailers, you may pay substantially more than you would on a traditional retail contract.’’
Power providers protect themselves from spot-price spikes by setting their prices higher than they expect the average to be.
Savings on spot-price contracts can also come as a result of homeowners being able to keep an eye on the spot price using the Flick online ‘‘dashboard’’. This lets them work out when is cheapest to run their appliances.
Stewart says she can now see exactly what it saves to run the pool pump in the wee small hours, or have the dishwasher run off-peak.
‘‘I was able to see for the first time what power I was using, at what time of the day, and what it was costing me,’’ she says.
Part of Flick’s appeal is that on its bills, it tells customers how much they have saved since switching from the plan they were on with a traditional power provider. Stewart is boss of Mirrorwave, a company which helps other companies find out what their customers really think of them.
Stewart’s last bill claimed savings of $1033.70 since she switched around August last year.
Nationwide, there are some significant savings on offer.
The Electricity Authority estimates $280 million in savings are available in the electricity retail market if all households were to switch to the best-priced options.
Flick’s founder Steve O’Connor says research shows around 95 per cent of domestic power users are entirely ‘‘disengaged’’ with their power providers. They see all power providers as being similar, and don’t know they have options.
The company has around 10,700 customers.
Since launch two years ago, it now claims to have saved more than $2m for people who switched to it, with figures rising by $85,000 a week.
The average saving per customer, compared to what they would have paid on their old power contracts, was $412.
Flick’s Rebecca Read said: ‘‘We have a small number of customers who have saved more than $1500 since joining us.
‘‘Savings are best over winter and spring because the spot price is typically lower through this part of the year – when there’s lots of wind and rain, and abundant supply, prices tend to drop. But because consumption is typically lower in summer and autumn, when prices are slightly higher, our customers tend to have very steady bills over the year.’’
‘I was able to see for the first time what power I was using, at what time of the day, and what it was costing me.’