Households could save up to $180 a year on electricity just by comparing prices, a New Zealand power company says.
According to a study by the Ministry of Business, Innovation and Employment (MBIE), in the year to March 2020, the average household spent $2067 ($172.25 per month), and used 7099 kWh (591 kWh per month) of electricity.
Despite holding just under 3 percent market share, in the three months from June to August 2020, Electricity Authority switching data shows Electric Kiwi had a net gain of 9453 customers. Over the same period, three large providers had a net loss of between 6000 to 7300 customers.
Electric Kiwi CEO Luke Blincoe told Newshub that based on company calculations, the average customer who switched to Electric Kiwi over the last year saved $180. As 42 percent of electricity consumers have never switched, many could be paying too much.
"Customers joining us save $180 in the first year on average. Most people are paying well-over the odds: there's a paradox where loyalty doesn't get rewarded," Blincoe said.
Customers can get an cost estimate across all power providers through the Government-supported website powerswitch.org.nz. As pricing and offers change, Blincoe encourages people to get an estimate once a year and check it against their bank statement, or monthly electricity bills.
"If everyone gets into that habit, the threat of switching should be enough to get prices down," Blincoe added.
Although some providers offer special deals, such as a sign-on credit, he suggests people check if they'll be tied into a one or two-year contract, and if there's an early exit fee.
"With a contract, consumers are giving up the only leverage they've got over a power company: that's the ability to leave," Blincoe said.
"You've got that certainty, but you're stuck on a rate and have lost your ability to respond to poor service."
An electricity bill is made up of six components: generation, transmission, distribution, retail, GST and other related supply costs. Andy Doube, general manager market design at Electricity Authority, said as with other industries, retailers set their own prices and are influenced by competition.
Cheaper prices can be offered by providing services at a lower cost, or reducing them, for example, not providing a free call centre service.
"When a retailer offers a lower price for their electricity package, it’s important to check what services are provided as part of that package. Is it the same bundle of services, or fewer services?" Doube said.
It usually costs nothing to switch - but customers should first check if there are any associated costs.
"For example, an existing retailer may charge fees for disconnection, breaking a fixed-term contract, or organising a special meter read. Consumers should [also] ask their retailer if a bond is required," Doube added.
Those who dislike the idea of switching could also check with their current provider if they're on the best plan for their needs.