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Media release - 1 February 2010

New Zealand businesses could potentially save millions of dollars a year by switching to a better value electricity supplier, according to Powershop.

Powershop, which sells electricity over the internet, discovered a pricing anomaly when they started doing bill estimates for companies interested in getting a better deal.

Based on more than 300 nationwide businesses Powershop prepared estimates for, they calculated Auckland businesses could save an average of eight percent, Wellington businesses nine percent, Christchurch businesses 17 percent and Dunedin businesses an average of 24 percent off their current annual power bill.

Powershop Chief Executive Ari Sargent says there is no good reason businesses are paying too much for their power.

“We’re shocked at how much some businesses are paying. The hundreds to thousands of dollars that many smaller businesses are overpaying should be profit, not filling the already well-padded pockets of big power retailers,” Mr Sargent said.

Mr Sargent believes the practice of charging the business sector overly high prices began decades ago.
“Historically, when the electricity market was managed by regional power boards, local councils would hike up power prices for businesses to subsidise residential customers. This practice ended in the nineties but the relative lack of competition means, in our opinion, power companies are getting away with charging businesses more than they should.

“Rather than working out the wholesale price of a unit of electricity and adding a reasonable margin, it appears that power companies are starting at a historically high figure and then only going lower if pushed by customers or competing power retailers,” Mr Sargent said.

Don Peebles of Peebles Owen Group, which runs four petrol stations in Christchurch and employs around 50 people, has recently switched to Powershop and expects to save around $15,000 over the next year, a quarter of their current annual power bill.

“We’ve always paid a lot for electricity but I was blown away by how much we were being overcharged. We’ve had enough of other power suppliers overpromising and underdelivering. It’s about time electricity prices became more competitive,” Mr Peebles said.

The Frenzi Group in Auckland, owner of several restaurants and bars including De Fontein, The Occidental, The Ponsonby, De Post and Malt, has recently switched to Powershop. Director Roy Thompson said they expect to save around $23,235 a year across the five venues, a 20 percent saving on their current annual power bill.

“We use a lot of power, running all our kitchen, refrigeration, lighting and audio-visual equipment. Each year many of our operating costs rise relentlessly yet we are unable to pass these savings on to our customers. Our margins are continually squeezed.

“If Powershop deliver on their savings estimates, then we will benefit from some very helpful savings,” Mr Thompson said.

Powershop has already proven it saves residential customers money. In the Government’s quarterly survey of domestic electricity prices, Powershop was shown to be the cheapest electricity supplier in Auckland, Wellington, Christchurch, Dunedin, New Plymouth and Palmerston North. (see http://www.med.govt.nz/templates/MultipageDocumentTOC____39087.aspx)

“We’ve used the Internet to fundamentally change the way people relate to electricity and to their power company. The internet allows us to keep costs low and lets businesses control how much power they use and keep an online record of all their bills” Mr Sargent said.

* Powershop has recently been achieved the highest customer satisfaction ratings in a survey by Consumer http://www.consumer.org.nz/reports/energy-providers/introduction

2009 has been a tough year for most people in many ways. What better way to end the year than with a bit of light hearted fun? That’s why we created Powersheep - a little distraction for the end of the year to help our customers and friends to unwind a little.

For the avoidance of doubt, no animals were harmed in the creation of this game, and we do not condone cruelty to sheep or any other animals. Nor do we recommend playing in or around power lines - you should not approach or climb on pylons, nor kick or throw anything at overhead lines. This is just a bit of fun that appeals to our no. 8 sense of humour.

Play Powersheep (but please do not try this at home!).

As Margaret has quite rightly pointed out to me, our introduction of power “specials” has really bucked the trend for power companies, and has been a whole lot of fun too.  Here’s a little sampler of those specials (in no particular order).

As 2009 draws to a close we seem to be running faster than ever here at Powershop. However, I thought I’d take a few minutes out to share some of our highlights of the year with you all:

- We had our ‘official launch’ with the airing of our first TV ad on Sunday 22 February. All of the Powershop crew travelled over to our Contact Centre in Masterton to share in our first public moment. The quality of the TV reception didn’t dampen the enthusiasm one little bit.

- We hit our first milestone of 1,000 customers on 30 April (which just happens to be my birthday).

- Getting through Winter was hard for us. After an initial burst of enthusiasm the world seemed to slow a bit. However, being confirmed as the cheapest provider by MED in most areas we operate gave us a lift.

- We introduced NZs first smart meter product in Christchurch, our 20% Cheaper Weekends offer. This was a turning point in our growth, and the rate at which customers have been joining up has increased markedly over Spring.

- We recently started serving the small business market and were surprised at the amount we could save some businesses on their power costs. We were also really excited when we signed up our first 1 million kWh pa customer.

By far and away the most important achievement this year though was our ranking in the Consumer NZ energy provider satisfaction survey. We were overwhelmed by the response from our customers. This was really important to us, because it confirms we are on the right track. We launched our innovative retail service model into the marketplace with a strong hunch that our customers would see the real benefits it provides, and after they had used it for a while they would fall in love with this new way of buying power. So we genuinely want to say “Thanks”. Thank you for trusting us, thank you for your continued support, and thank you for loving us

Wishing you all a wonderful holiday break.

Ari and the Powershop Crew.

We are now a little over the half-way mark in our DIY 10 in 10 challenge. Hamish (our Head of Sales & Marketing) and myself have posted some interim results on the 10 in 10 Challenge Facebook page and appear to be on track to meet our savings targets.

We’d love to hear how you guys are getting along?

This blog post previously contained the Powershop Media Release (that has already been widely reported) outlining some of our views on the proposed electricity industry reforms. Meridian Energy, the sole owner of Powershop, has requested that we remove this statement because, despite Powershop’s operational independence from Merdian, some media and commentators reported or interpreted our position as being Meridian’s position on these reforms - this is not the case, our stated position is solely our own.

The Powershop crew have decided to show our support for COP15 The Copenhagen Climate Change Conference by proving it’s possible to make a small change ourselves that can make a big difference to the world. We reckon we can each cut back our energy consumption by 10% for the 10 days of the summit. If all of NZ were to do this for a year it would save 200 million tonnes of carbon!

If you’ve been following the road to Copenhagen and feel the need to do something why not try and do 10 in 10 – 10% less power in 10 days.

We’re going to start on Day One of Copenhagen on the 7th of December through to the 16th, two days before the summit ends. Become a fan of the 10 in 10 Challenge on Facebook.

It may not exactly be earth saving, but it’s a start. Anyone is free to join in. All you need to do is start to record your meter reading every day leading up to the 7th and then work out your average daily use. On the 16th work out your average daily use over the 10 days using the Savings Target Spreadsheet and compare to your previous average daily use.

We’ll compile all the results and see just how much of those greenhouse gasses we can clean up at home.

In reality there is no such thing as ‘green’ electricity if you get your electricity out of the national grid (refer my earlier blog post ‘Where does my power come from?’). Power taken from the national grid is produced from a variety of generation sources, some of which emit carbon into the atmosphere. In practice, irrespective of whom you buy your power from, the source of the power you use will not change.

More and more consumers are becoming more aware of the link between electricity consumption, carbon emissions and climate change. However, the whole ‘climate change’ industry is dominated by complex jargon and confusing terminology. We are tying to cut through all of that confusion and offer our customers practical options to reduce their effect on climate change.

There are three broad actions that everyone can take in relation to consumption of resources generally, and also specifically with electricity:
1. Reduce consumption, where possible.
2. Consume renewable, non-polluting resources.
3. Offset carbon emissions.
Powershop offers the information, tools and products for customers to adopt any or all of these actions that suit their lifestyle and budget.

Reducing consumption
Powershop provides simple and understandable information that allows customers to understand exactly how much power they are using each day, and immediately see the benefit of changing the way in which they use power or investments they have made to reduce consumption (eg. insulation, heat pumps).

Your unit balance shows you how much power you have left, how much you are using each day and how long your balance will last you. You can enter your meter reading whenever you like to track your usage and make sure your balance is accurate. We also have other charts and information that allow you to monitor your consumption over time.

Power from Renewable sources
Meridian Energy generates electricity using only renewable resources and has two CarboNZero^certTM products available for purchase within Powershop.

The certification process requires that the emissions associated with the generation and retail of the amount of electricity sold are measured, subject to management plans and offset according to the carboNZero standard. This does not mean the emissions associated with your power consumption have been offset because it is not possible to track electricity flows through the grid, and because there is no linkage between who you buy your power from and where the power you use is actually produced.

You can buy these products to show your support for Meridian as a generator that generates using only renewable resources, rather than to offset emissions.

Meridian also run ’specials’ from time-to-time, notably when their lakes are full of water.

For more information on Meridian’s products see our Products & Pricing page.

Offsetting Carbon Emissions
If you really want to help fight climate change you can ‘offset’ the emissions associated with the production or consumption of your power using carbon offsets.

A ‘carbon offset’ is produced by projects that either absorb carbon from the atmosphere (eg. forests) or offset emissions from another source (eg. a windfarm that reduces the amount of production from a coal fired power station). There is a plethora of international standards for carbon offsets with a range of different criteria associated with them. A key feature of all offsets though, is that they must be ‘additional’ – that the project or initiative producing the offset would not have occurred anyway without the revenue from sale of the carbon credits.

Powershop currently has two suppliers who provide carbon offsets with their electricity products.

PowerKiwi Limited supplies power under the brand name ‘The Green Power Company’
All purchases of The Green Power Company product are accompanied by a offsets verified to the ‘Voluntary Carbon Standard‘.

Airshed supplies two different power products, one intended primarily for residential consumers, and another targeted at businesses who participate in a certification programme such as Landcare’s CarboNZero programme. Both Airshed products have offsets verified to ‘Gold Standard‘ that meet other sustainability criteria in addition to offsetting carbon. This Gold Standard is supported by environmental organisations such as Green Peace and WWF.

For more information on ‘The Green Power Company’ and Airshed products, see our Products and Pricing page.

The Ministry of Economic Development has today officially named Powershop.co.nz as cheapest electricity supplier to Auckland, Wellington, Christchurch, Dunedin, New Plymouth and Palmerston North in its Quarterly Survey of Electricity Prices.

Powershop.co.nz CEO Ari Sargent says the news was proof that Powershop.co.nz’s low cost business model offered the best deal for consumers.

“It’s all about keeping costs low. The internet is our head office and the rent for a web address isn’t nearly as much as a flash high rise building. We’re small and everything we do, we do to save our customers money,” he said.

Simon Lawrence Manager of Energy Information at the Ministry of Economic Development (MED) encouraged electricity consumers to look at their options.

“The MED encourages people to shop around and Powershop can offer customers good savings compared to other retailers,” Mr Lawrence said.

Mr Sargent said that Powershop’s ability to deliver the cheapest electricity in New Zealand was a testament to the power of increased retail competition

“It’s a simple equation - more competition always creates cheaper prices for consumers. The more small, low cost retailers like Powerhsop that you can get into every market, the cheaper prices will be,” he said.

Mr Sargent said the key to making it easier for new retailers to enter the market was making it easier to buy forward hedge contracts from generators on the wholesale market. Powershop is unusual among power companies as a pure play retailer. Almost all other electricity retailers are also power generators.

“The liquidity of hedge contracts on the wholesale market is the single largest factor determining the level of competition in New Zealand retail electricity markets. If they were easier to buy and sell there’d be more competition from small companies like us and cheaper prices for consumers,” he said.

Mr Sargent said he hoped that the Electricity Market Review currently being undertaken by the Ministry of Economic Development would address this issue.

To read the Quarterly Survey of Electricity Prices, visit MED - Quarterly Survey of Domestic Electricity Prices

The Sunday Star Times this morning (6 September 2009) again features an article about electricity - Flick the switch and save packet.

We fully endorse the claims made by reporter Lois Cairns that “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”. In fact they are very similar to words we ourselves have been using for some time.

Hunting out a good deal

Hunting out a good deal isn’t difficult and switching is really easy and painless.

Consumers Institute has a great website resource (www.powerswitch.co.nz) for electricity users to find out what options are available in their area, and will highlight the cheapest supplier.  Unfortunately, Consumer has set up powerswitch to compare traditional tariff options and as yet have been unable to incorporate Powershop directly into their calculations due to our simplified pricing structure. This is a real shame because Powershop is currently the cheapest supplier in many areas. We are currently working with Consumer to help them incorporate Powershop directly the powerswitch.

In the meantime we suggest that customers either use the Powershop savings calculator or if you prefer use the independent advice from Consumer to help you find the cheapest option for you (beware of any special conditions from retailers) and then use our savings calculator to compare estimated annual costs between Powershop and the cheapest option recommended on powerswitch.

Once you have decided the best option for you, whether that is Powershop or someone else, switching is generally a simple matter of contacting the new retailer and providing them with the information they need. The switch itself may take a few weeks to complete, but there will normally be nothing else that you will be required to do, and there won’t be any disruption to your normal service during the transfer.

Powershop has made the switching process even more painless for our customers, because:

- it can all be done online (and we’re only a phone call away if you need help)
- we do not do credit checks, and we do not require bonds from our customers
- we keep you informed during your transfer so you know what is going on
- we offer a 60 day guarantee, if you are not happy during this timeframe we will help you transfer back to your old supplier and refund any unused power - no quibbles.

So why not exercise a bit of buying power - spend 10 minutes checking out the best option for you, and if there is a better deal out there for you, grab it! Switching electricity retailer is not a life changing decision - it is easy and you can always change again if you are unhappy with the service or price of your new retailer. We’d love to have you as a Powershop customer, but even if we’re not for you, you owe it to yourself to check out if you can get a better deal.