What to consider when changing power companies

Thursday, 15 September 2016

If you're willing to actively manage your power use, you might be able to save a lot with a company that offers variable pricing.

Power companies are competing hard for business and it is good news for their customers.

Taking advantage of the sweeteners on offer can save you significant amounts of money: Genesis is currently offering customers up to $300 off their first bills when they sign up, while Mercury is dangling the carrot of $100 credit.

Ditching paper bills can help you save money on your electricity account.

Carl Hansen, chief executive of the Electricity Authority, said customers could expect to get sales calls or visits from a number of different companies, as electricity retailers increased their marketing efforts.

Over recent years, the number of providers in the market has grown markedly and smaller players have started to capture a greater share.

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Between January 2011 and today there have been 21 new retail brands enter the market.

But Hansen said it was worth asking questions about any new offer before signing up.

1) Contract length: Ask how long the contract is and if there was a break fee to get out before the end of it, Hansen said.

If your circumstances are likely to change, such as moving house or having a baby, it's worth thinking about whether the contract will still suit your lifestyle, especially if it is fixed for a number of years.

But if there is no fixed term, it is not hard to change again if the new provider does not work out to offer a good deal for you. And regardless, if you sign up and realise it was not the right move, you may be able to back out.

'If you sign-up after being cold-called, the Fair Trading Act gives you five working days to cancel the deal for any reason. The sales rep must tell you about this cooling-off period both verbally and in writing,' Consumer NZ spokeswoman Jessica Wilson said.

2) Payment terms: Most retailers offer direct debit and online payments, but it is worth checking what their billing cycle is.

Some retailers are now offering prepay, weekly and smooth pay options.

The smooth pay option allows householders to set up their accounts so they pay slightly more during the low-use summer months, so that they do not experience the shock of big bills come winter.

Choosing what is right for you is important. It is also helpful to know how you will be receiving your bill. Some retailers only offer their bills online.

In some cases you can get good discounts for dealing with all your payments and bills online. Contact offers a 20 per cent discount to people who pay online and on time.

3) Tracking your use: Some retailers are offering app and online services to help you track your electricity use.

If you like the sound of that extra information, it is worth asking what digital tools retailers offer.

Also, if you have the flexibility in your lifestyle to change when you use electricity then look for retailers that offer low prices at off-peak times (11pm to 7am). Buying from these retailers could save you money.

New entrant Flick offers the opportunity to be really hands-on with your power bill – it passes on the wholesale rate, plus a margin, and offers warnings when prices spike so you can avoid the most expensive times. This has led to very good savings for people who are willing to pay attention to their power bills and alter their behaviour when required.

4) Take advantage of specials. If you're contacted by a retailer about signing up, ask what bonuses they offer.

You might get money off, rewards such as Fly Buys points or other discounts for bundling services with them.

If you are happy with your current provider but someone else is offering a better deal, you can go back to your current power company and ask them to match it. Use a site such as Powerswitch or WhatsMyNumber to compare what is being offered with what else is available in the market.

Jenny Cameron, chief executive of the Electricity Retailers Association, said the competition could be expected to continue.

'We definitely predict that there will be more entrants to the market. Whether it continues at the same rate and whether all the same participants continue is difficult to say, but it is clear that entrants to the market will go hand in hand with technological advancements in the sector,' she said.

'This is good news from a customer perspective. Given the market is already very competitive it means that any newcomer will be trying to find their point of difference, and current players in the market will need to continue to satisfy their customers.'