Electricity retailers complain of carnage
Independent retailers Pulse Energy, Electric Kiwi, Vocus Communications and Flick Electric have laid a joint complaint with the Electricity Authority (EA) about wholesale electricity market conditions.
Wholesale power prices have soared recently. Last month, the average was $300 per megawatt-hour.
That’s nearly three times the highest October monthly average previously recorded. It has meant big bills for customers on variable rates, such as Flick’s, and has put pressure on firms offering fixed-price billing.
There have been claims that the big gentailers are ‘‘gaming’’ the market – and supplying their own retail brands at a cheaper price than to competitors.
There have also been rumours that small players without enough hedging – protection against high wholesale or spot prices – might go out of business.
On Tuesday, it was revealed that Payless Energy had decided to stop selling electricity because of that price pressure.
The four retailers, with more than 148,000 customers combined, said the spot prices were not transparent or justified, and had collapsed liquidity in the hedge market, threatening independent competition.
Electric Kiwi chief executive Luke Blincoe said the EA should step up.
‘‘By allowing current conditions to go unchecked, the EA is failing to regulate this sector with the independence and vigour necessary to fulfil its responsibility for promoting competition and the interests of consumers.
‘‘This inaction undermines confidence in the market, and ultimately demonstrates market failure.’’
Flick boss Steve O’Connor said there was a flaw in the market design.
‘‘It is about opportunism driven by a lack of well-supported competition – opportunism that has already seen three independent retailers exit the market,’’ he said.
‘‘We are elevating this issue on behalf of our customers and all Kiwis, who deserve a properly functioning market.’’
Vocus’ head of regulatory and commercial, Johnathan Eele, said: ‘‘Essentially the big gentailers have been ripping off Kiwi families for decades and will continue to unless they are made to change their practices.’’
The four firms are lodging an undesirable trading situation (UTS) claim for urgent consideration by the EA.
The EA must consider the claim and decide whether this constitutes an ‘‘extraordinary event’’ that threatens confidence in the wholesale market.
Flick Electric chief executive Steve O’Connor says there is a flaw in the market design.