Flick the switch and save hundreds

Thousands of Kiwi homeowners are still paying more for their power than they need to and could save money simply by changing their electricity supplier.

A comparison of electricity prices around the country has revealed the dominant power companies in Auckland, Wellington, Christchurch and Dunedin are consistently charging their customers more for power than their smaller competitors.

In Auckland, where Genesis Energy has the biggest share of the market, a "typical" family of four using an estimated 9350kWh a year could save around $26 a year if they switched from Genesis to Contact Energy. They could save another $90 on top of that if they bought their electricity through the online electricity retailer Powershop.

Powershop, which launched in the four main centres in February and has recently expanded into Wairarapa, Waikato, New Plymouth, Wanganui and Palmerston North, sells power from different retailers via the internet. Customers buy electricity when they need it, choosing from a range of electricity products. This means they know in advance how much they are paying for power.

In Wellington, where a family of four can expect to use around 11,000kWh of power a year (the figure is higher than in Auckland because of the greater need for heating), Meridian Energy dominates the market. Its customers can expect to pay around $2363 for their power, but if they switched to Nova Energy they could pay as little as $2120, a saving of $243.

The same family living in Christchurch would churn through around 11,660kWh of power over a year. Their bill, if they were customers of Meridian Energy, which dominates the electricity market in the South Island, would total around $2486. They could buy the same amount of electricity from Mercury Energy for around $2276, a saving of $210. They could save a further $200 if they bought their power online through Powershop.

In chilly Dunedin it is estimated a family of four would use around 11,990kWh of power a year. Their annual power bill, if they were customers of Contact Energy, the dominant electricity retailer in the city, would total around $2507. If they switched to Mercury Energy their power bill would drop to around $2262 (a $245 saving). They could take another $120 off that by buying power online.

Consumer New Zealand, whose website www.powerswitch.co.nz allows people to calculate which electricity retailer will give them the best deal, said it could not understand why more people were not switching when clearly many would gain financially from doing so.

"It does puzzle us," said Consumer's testing manager, Hamish Wilson. "People are happy to complain, but why don't they take some action, because that would send the electricity industry the clearest message?"

Electricity Commission figures show more New Zealanders did change power companies in June than at any other time in the past seven years. In June, 23,892 connections changed power companies, the highest number since 26,614 changes in March 2002. But thousands of people are still paying more than they need to.

"One of the key things is that the electricity industry is not very good at is making switching easy. It can take weeks for it to happen," said Wilson. "The [energy] minister [Gerry Brownlee] would like weeks to be cut down to days, and we fully support that."

Wilson said while buying electricity online through Powershop required consumers to monitor usage and "do a little bit more work" than under conventional contracts with power companies, the savings could be quite substantial.

"You stand to save quite a lot of money if you are prepared to put in a little bit of work and effort."

Powershop, a subsidiary of Meridian, acts like an online broker and allows customers to buy electricity from a range of suppliers, seeking out the best price day by day if they wish. It is able to offer savings in part because of the lower overheads of running an online-only operation.

Ari Sargent, chief executive of Powershop, which has so far signed up around 3500 customers, said traditionally people had lumped power companies altogether as being "evil and as bad as each other", but they were slowly starting to realise there was "money to be saved and deals to be had" if they shopped around.

"A lot of people don't realise how easy and painless it is to switch," Sargent said.

- © Fairfax NZ News