Power price surge too hot for some customers

A dry winter is making power more expensive.
KIRK HARGREAVES/FAIRFAX NZ

A dry winter is making power more expensive.

A dry start to winter is proving uncomfortable for some customers of power companies that offer variable, wholesale rate-based pricing.

Flick and Paua to the People both charge their customers power prices that follow the underlying wholesale rates.

That has resulted in solid savings for most customers over recent years. Flick chief executive Steve O'Connor said customers who had been with his firm for the past two years would be on average $1000 better off.

Steve O'Connor says Flick customers should not be surprised by a pricier winter.
ROSS GIBLIN/FAIRFAX NZ

Steve O'Connor says Flick customers should not be surprised by a pricier winter.

But wholesale prices are now trending up and hydro lake levels in the South Island are falling, prompting concerns about a dry winter. In early June, spot prices were about 11c per Kwh, on average. That is about double what they were at the same time last year.

READ MORE: Flick app helps customers target renewable electricity sources

O'Connor said his customers were facing higher prices and would have to wait to see how high they could go.

In 2008, spot prices were over 20c per kWh for a sustained period.

O'Connor said it was likely that there would be weeks where Flick customers paid more than they would if they were with a standard retailer. "We know historically over decades there has tended to be a drier winter every five years."

It should not come as a surprise, he said. Customers knew it was a possibility and the company gave them information and guidance to help them to avoid the priciest periods.

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But some customers have complained.

One, Victoria King, asked: "Why is it so high lately? Almost always 39c/kWh each morning…  the current rate is nearly double what our previous company's fixed rate was. So while summer was great, these current rates just aren't sustainable by many people. 

"Can you give any indication on when these high spot prices are expected to last until? Is this going to be a regular thing all winter long? And every winter from now on? Last winter wasn't this expensive, so what has changed? "

Others said they were considering moving to another retailer over winter.

"It's just a certainty thing - yes you might not be able to save quite as much as you potentially can with Flick but, depending on your situation, you are going to get burnt with Flick over the winter as peak consumption in the house is at the same time as peak prices. Given how easy it is to change companies, the perfect model is to use Flick over spring/summer/autumn, but if prices start spiking then leave for the cheapest, non-contract rate and rejoin again later. Genuine consumer power," Shaun Baker wrote.

By comparison, most standard models deliver power at about 25c to 28c per kWh.

Electric Kiwi said it had seen evidence of customers moving to retailers with standard pricing models.

A spokesman said the firm was on track to win more than 200 customers from spot-price retailers in June, compared to 18 in April.

Flick's own figures show that 28.7 per cent of its customers shifted to other retailers in the year to May, up from 21.4 per cent in April.

O'Connor said customers were not locked in to term contracts. The level of shifting that had been recorded so far was not unreasonable, he said. Many companies ran pre-winter campaigns in May, ahead of winter.

Flick was the fastest-growing retailer in terms of customer switches for the month. 

- Audio courtesy of RNZ

 - Stuff

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