Record number of electricity retailers makes big players lose market share

  • News
  • March 9, 2015
  • Elly Strang
Record number of electricity retailers makes big players lose market share

There was also a 1.2 percent rise in demand for electricity last year brought on by the Christchurch rebuild and irrigation.

Electrical Authority chief executive Carl Hansen says it’s not just the number of retailers is rising, but the offers available to customers have become more diverse.

“Not only do we have a record number of retailers in the market, but also, more importantly, we are now seeing a real diversity in the type of contracts, payment methods and added benefits offered to consumers,” he says.

There are now 27 different brands in the market, which means greater choice from the big four: Contact, Meridian, Mighty River Power and Genesis.

Although the larger companies have only lost a small percentage of their customers, the rise in mid-sized companies is putting them under pressure and affecting their pricing decisions for 2015, says Electrical Authority chairman Brent Layton.

“Looking ahead to 2015, we expect electricity prices at the same levels as 2014, or to potentially slightly decrease,” Layton says.  

However, out of those 27 companies operating in the market, 11 have fewer than 5000 customers.

One of the newer additions to the market, Flick Electric Co, has 850 customers. It launched in Auckland last week.

Its CEO, Steve O’Connor, has called on larger electricity companies to separate their retail and generation businesses to create a more innovative market.

O’Connor says while the generation and transmission section of the industry is doing a good job, the electricity side of it doesn’t engage customers enough.

He says it resulted from electricity reforms in the 1990s letting generators become retailers, too.

 “The unfortunate consequence is that the gentailers – which at their heart are generation focused – treat their customer bases as a financial hedge for their production. The result is opaque pricing and a low level of retail innovation,” he says.

The results from the report showed only 35 percent of consumers would approach and engage with a retailer about switching power companies.

Hansen says the authority is focusing on creating a more competitive retail market this year. 

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