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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

Tags: business, pricing, savings

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