Power retailer Flick warns new customers as spot electricity prices surge

Even saving power will not stop the surge of electricity prices, an industry commentator says.
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Even saving power will not stop the surge of electricity prices, an industry commentator says.

Wellington power retailer Flick Electric is warning new customers about soaring spot electricity prices before making the switch.

The company, which sells power at wholesale prices, also known as spot prices, is giving new customers the option to join or to to hold off, until prices drop.

Chief executive Steve O'Connor​ said the higher prices could last between three and eight weeks. Wholesale price surges happened only once every five years.

The South Island hydro lakes, including Lake Benmore, have not had much rain and are getting dangerously low.
JOHN BISSET/STUFF

The South Island hydro lakes, including Lake Benmore, have not had much rain and are getting dangerously low.

"We are informing all new customers of the market circumstances at the moment, and giving them the option of joining now or being held."

READ MORE: Thousands consider changing power companies as spot price bills skyrocket

But, electricity industry commentator Bryan Leyland said the surge would have long-term effects and was likely to be repeated next winter. He said the country was experiencing a dry winter.

Flick Electric chief executive Steve O'Connor.
CAITLIN SALTER/STUFF

Flick Electric chief executive Steve O'Connor.

Electricity Authority chief executive Carl Hansen said spot prices had risen substantially since May this year, but were "not unusually high by historical standards".

"In the last two days, when the weather has been cold, the amount of electricity the country has used has been near record levels, and much of our thermal generation was running.

"These generators can only afford to run at high prices, and so the market is working by encouraging these generators to run when they are needed to meet demand," he said.

About 24,000 households have signed up to spot price power companies Flick Electric and Paua to the People.
KIRK HARGREAVES/STUFF

About 24,000 households have signed up to spot price power companies Flick Electric and Paua to the People.

O'Connor said Flick customers had on average saved money for 102 weeks before wholesale prices spiked when the bad weather hit.

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Customers needed to understand that wholesale energy prices fluctuated, he said.

"Our model is not perfect for everyone. We are really clear on our website about the model and how it works, we are clear that at certain times, in certain situations, bills may be more expensive and this is one of those situations.

"Right now we are explaining to our customers that a dry winter happens once every five years."

However, Leyland said if spot prices were high this year, there would be a price increase next year as well.

Prices were high because the South Island hydro lakes had not had much rain and were getting to "dangerously low" levels, Leyland said.

In addition, wind generation had been unusually low for the past month, he said.

It was unclear when the high spot price would drop, as it depended on when rainfall in the hydro catchments, he said.

"This usually happens in late July or early August but sometimes it has gone on longer than that.

"Another uncertainty is the reliability of the big thermal generators. If one of them has a major breakdown that takes it out for several weeks, we will immediately be in a serious situation."

About 24,000 households have signed up to spot price power companies Flick Electric and Paua to the People.

TOP 10 ENERGY-SAVING TIPS

1. Don't fear the electric blanket: They cost little to run (just over $10 per winter if used every night), especially compared to electric heaters. However, only sleep with it on if it has a delay timer that can switch it off after a few hours.

2. Break out the crock pot: Running a slow cooker all day uses a third of the electricity compared with cooking a roast in an electric oven for two hours.

3. Check your heat pump filter: It needs vacuuming every three months. If you haven't cleaned it all year, you'll immediately notice the difference.

4. Clean your clothes dryer's lint filter: Remove the filter, and give it a vacuum. This can significantly improve your dryer's energy efficiency, thereby reducing its running costs.

5. Draught-proof your home: Are your door hinges loose or your window latches rattly? Grab a screwdriver and tighten them up. If that doesn't work, buy some vinyl strips that adhere to the insides of the window frames to achieve a better seal between the window and the frame.

6. Cheapo double-glazing: DIY window film, which fits across your frame and sits a little off the pane, can cost less than $10 per pane. You simply fit it to the frame to create an insulating layer of air between your room and the cold glass. Alternatively, taping bubble wrap to the window frames will achieve the same effect.

7. Light smarter: Switch from your old incandescent, halogen or compact fluorescent (CFL) bulbs to LEDs. They use far less energy and last much longer.

8. Check your power deal: Visit Powerswitch.org.nz to see if you could be getting a better deal for power elsewhere. If you're on a spot-based tariff, consider switching for the winter to avoid the high spot prices currently experienced on cold winter evenings.

9. Shower smarter: Grab a 10L bucket, chuck it under your shower and start timing. If it fills in less than a minute, your showerhead is a water-waster. You can snag a low-flow, energy-efficient showerhead for less than $100.

10. Revisit your childhood with a wheat bag or hot water bottle: It costs next to nothing to fill a hot water bottle or heat a wheat bag, and they're a great way to keep the bed warm in a pinch.

Source: Consumer NZ

Clarification: Flick is not holding all customers from joining the company as stated in an earlier version of this story.

 - Stuff

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