Surge in power company switching as wholesale prices bite
Thursday, 15 November 2018
Six thousand more New Zealanders switched power supplier last month as wholesale, or spot, electricity prices soared.
Last month, the average wholesale price was $300 per MWh. That's just under three times the highest October monthly average previously recorded.
At the end of the month, a spike in parts of the country took wholesale prices to $1000 a MWh.
Most households won't have noticed the difference. But it directly affected customers on variable plans such as Flick's, which follow spot prices. Its social media pages were flooded with complaints from households seeing bills soar to hundreds of dollars a week.
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Data from the Electricity Authority shows 38,870 households changed their supplier in October, 6000 more than moved in September.
'One reason for this will be high spring wholesale prices. About 1 per cent of New Zealand households are on spot pricing plans that would directly expose them to the higher spot prices,' said Electricity Authority chief executive James Stevenson-Wallace.
More than 2000 switches were from Flick.
Electric Kiwi, the country's eighth-largest retailer, added 1491 customers during October. But it had to stop taking customers moving from variable-price providers.
'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,' chief executive Luke 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.'
Meridian picked up 1249 new customers in the month.
Canterbury was the most active switching region, with 2.3 per cent of consumers across the residential, industrial and commercial markets changing supplier in October.
PowerDirect and Payless Energy indicated they were leaving the market – Payless said the wholesale prices created untenable funding pressures.
Moe than 200 of the switches were from PowerDirect in October.
Pulse Energy, Electric Kiwi, Vocus Communications and Flick Electric have laid a joint complaint with the Electricity Authority (EA) about wholesale electricity market conditions.
The 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.