Electricity prices getting less competitive

Source: 1News

Electricity prices are getting less competitive and consumers have less choice, as some independent retailers reduce the number of new customers they’re taking on.

Five retailers have pulled out of the price comparison website Powerswitch , according to Consumer New Zealand, which runs the site.

The retailers are Nova, Flick Electric, Electric Kiwi and the smaller companies ID Power and Smart Energy Solutions.

All five are still servicing current customers, but don’t appear on the results page of Powerswitch when customers make a price comparison.

Flick Electric is not taking on any new customers and Electric Kiwi is not advertising for any.

"We’ve had to cease growth, which means fewer Kiwi families are actually seeing those savings," said Luke Blincoe, the chief executive of Electric Kiwi.

The five retailers make up just 10 per cent of the market, but are popular, accounting for 70 per cent of switches.

"The independents, who have left Powerswitch, for the last five years have been the price setters in the market and without independents keeping prices down, prices will only go up," he said.

Hand turning wall light switch off. color image in horizontal orientation

The independents buy power off the wholesale market, but low hydro lake levels earlier this year pushed prices up and they’ve stayed up.

"Today we've seen spot prices at $500 a megawatt, which is probably more than double what consumers would normally pay if we pass that through."

Yesterday, Flick Electric launched a petition calling for the Government to take action to address what it calls a "broken" market.

"We are seeing unreasonable and irrational prices in the wholesale market and that’s affecting our consumer pricing," said Sunil Unka, Flick Electric’s chief marketing officer.

The company is calling for the breaking up of the five big "gentailers", those that generate power and are also retailers. He said this will help keep prices competitive.

"The signals are showing that the price increases are going to continue, unless the Government steps in and does something," he said.

Powerswitch manager Paul Fuge said the market is not working for all customers.

"The generator retailers have an advantage over retailers that don’t have that, and we’re seeing that in these times of high prices. So when you get supply issues that advantage becomes more apparent," Fuge said.

He agreed there needs to be more separation of generation and retail.

"That will make a more even playing field, which will encourage more retailers into the market."

He also said there’s an overseas player and smaller social retailers delaying entering the New Zealand market due to the current difficulties.

The companies left on Powerswitch are mostly the big gentailers or outfits owned by them, such as Powershop.

"We are concerned about the long-term trends, so less competition means less pressure on prices. In the longer term we are concerned that prices will rise," Fuge said.

But he stresses there’s still competition, and the more consumers switch providers, the more it keeps prices competitive.

In a statement, Energy Minister Megan Woods said: "We have been implementing recommendations from the Electricity Price Review panel to increase competition in the market and make prices fairer, but I am open to hearing more ideas.

"The Electricity Authority is currently looking into high spot prices after I asked for advice on this and I am expecting it in the coming months."