Spot pricing 'like not insuring your car', retailer says as it puts brakes on switches

Tuesday, 23 October 2018

Flick customers are feeling stressed by their wholesale power bills.

One power retailer is no longer taking customers switching from spot-price power providers, because of an influx caused by high prices.

Low hydro lake levels coupled with reduced gas-fired generation have caused wholesale power prices to surge, the Electricity Authority says - and it's hitting some customers in the pocket.

The second-highest daily wholesale price since 2010 occurred on October 13.

The average wholesale price for the first 22 days of October was $280 per MWh, compared to the previous highest monthly average for October of $102, which was in 2011.

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Electricity Authority chief executive James Stevenson-Wallace said lake levels had been below average for this time of year since late winter.

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* Power retailer Flick warns new customers as spot electricity prices surge

* Yes, it is summer and, yes, spot electricity prices are going up**

That does not affect the majority of consumers who are on flat-price models.

But those who have variable pricing, such as Flick customers, feel the pinch.

Last week Flick Electric told customers three out of the seven days in the last billing had high spot prices, and customers would see continued high prices into next week's bills.

The company, which offers power at wholesale prices - also called spot prices - said the surge would continue to hit their customers' wallets in the coming weeks.

The high wholesale price was also impacting customer's ability to ditch Flick in favour of other retailers.

Flick Electric said, 'As during higher pricing periods last year, at least one retailer - Electric Kiwi - is making an individual business decision based on the appropriateness of their hedge structure and not taking on customers from all NZ spot price retailers - including us - at this time.'

One customer said on Facebook while she believed in Flick's business model, last week she paid three times her normal weekly bill.

Another said her bill nearly doubled from $54 to $100 over a week.

Electric Kiwi chief executive Luke Blincoe said it had made the decision not to accept customers from spot-pricing retailers this year.

A linesman works on a power pole in Cromwell.

Problems in the Pohokura gas field have been blamed for the high prices.

'This is in response to an influx of customers from these retailers as a result of the current spikes occurring in the wholesale electricity market. We are still accepting new customers from non spot retailers.

'In an ideal world, we would take all customers, and we empathise with families facing big bills. But to continue to offer savings to our existing customers we need to grow in an orderly fashion, this involves hedging our energy purchases far in advance when prices are favourable,' Blincoe said.

'Choosing a spot-based retailer is similar to choosing not to insure your car. You can end up paying more if something goes wrong. While we would love to help, it's a bit like calling your insurance company to get cover after a car crash has happened.

'Electric Kiwi does not blame customers for the situation and is encouraging Spot based retailers to proactively offer solutions to those affected rather than relying on the rest of the industry to subsidise a solution. Electric Kiwi also has concerns over how spot-priced products have been marketed and believe that spot-based retailers have a responsibility to better explain the risks associated with spot based electricity products to prospective customers. We are concerned that many of these customers were not aware of the risks involved.'