Z Energy's new electricity offer 'in the mix', says price comparison service

Tuesday, 9 March 2021

The company he runs is a big contributor to NZ's carbon emissions. We gave Z Energy boss Mike Bennett's 60 seconds to explain his big idea for tackling climate change. See the full One Hot Minute series at stuff.co.nz/onehotminute (first published

Z Energy isn’t offering the most competitive headline prices for electricity through its new Z Electric business but is “in the mix” once incentives are considered, a power comparison service says.

Z announced on Wednesday that it had entered the retail electricity market though the launch of Z Electric, offering free petrol as an incentive to attract customers.

Gavin Male, chief executive of power and broadband comparison service NZ Compare, said it was “great” that Z’s offers had no lock-in and no exit fees.

Because line charges vary from region to region, customers need to key in their address to a website to find out Z Electric’s charges at their property.

Z is offering 50 litres of “free” fuel, plus five free litres for every $100 that customers later spend on electricity – effectively about a 10 per cent discount on its quoted power prices – as an incentive to join.

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Z’s headline prices for electricity are not “ultra competitive” says NZ Compare, but may look sharper after the rewards it is offering.

The fuel rewards need to be redeemed through Z’s Sharetank online app.

Before rewards and incentives, a customer consuming 500 kilowatt-hours of power in Wellington would have a monthly bill of $166 from Z and $149 from Contact Energy, Male said.

“Top line – not the cheapest, but if you can make it work and you are smart you can probably do well out of it,” he said.

Z chief innovation officer Scott Bishop said Z Electric was intended to help customers and its own business transition to electric vehicles, admitting it was a “paradox” that its initial selling point was fuel rewards.

Bishop indicated Z Electric could design alternative incentives for customers who had already ditched petrol cars for EVs.

“But the reality is even the majority of ‘EV homes’ also have a petrol car,” he said.

Z has joined about 30 retailers vying to sell electricity to consumers.

Z Electric could in future let motorists recharge EVs at Z service stations and have the cost added to their electricity bill, he said.

It might later offer EVs and electric scooters to customers though a “subscription service” and provide a service through which they could install roof-top solar panels and home batteries, he said.

“It starts with being able to sell retail electricity but our ambitions are bigger than that.”

Another goal would be to provide better information to power users considering a switch to EVs, for example on getting chargers installed, he said.

Z Energy chief innovation officer Scott Bishop says people could in future top-up their EVs at Z service stations and have the cost added to their electricity bill.

“At the moment, it is just too complicated for customers to take the time.”

Z Electric will source its power from Flick Electric which will also provide customer support and billing for the service.

Z bought a 70 per cent stake in Flick for $46 million in 2018 in move it said was designed to diversify the business away from fossil fuels and improve the “long term sustainability” of the business.

But it wrote down the value of its stake by $35m the following year because of the level of competition in the retail market – essentially recognising the business was not worth as much as it had paid for it.

The commercial pressures on retailers that don’t have their own generation do not appear to have since let up.

Bishop noted Z was a launching Z Electric at a time when wholesale electricity prices were “unprecedented”, having averaged more than 30 cents a kilowatt-hour across the country in the fortnight to March 2, according to national grid operator Transpower.

John Harbord, chairman of the country's Major Electricity Users Group, warned high wholesale prices could persist through to the third quarter of this year and “drive some small retailers, small businesses, commercial and industrial consumers, through to larger grid-connected consumers out of business”.

The survival of some commercial power users was “on the line right now”, he said.

“They may not be around in 2023 to 2025 to see lower spot prices.”

The Electricity Authority is soon due to rule what action to take to rectify an “undesirable trading situation” in 2019 when Meridian spilled water from its dams that it could have used to generate power, and Bishop said Z was “very interested” in seeing what action it decided to take.

Flick would continue to independently market its own retail offers to customers outside its relationship with Z, Bishop said.

He did not rule out Z getting involved in grid-connected electricity generation, but said that was not something it had considered to date.

“It will all depend on how the business evolves and what customers expect from us.

“If it makes economic sense to explore opportunities, we’d always be open to looking at that,” he said.