Online energy retailer Powershop, a subsidiary of Meridian Energy, is mounting a concerted drive to take on TrustPower's dominance in the Bay of Plenty, claiming that Tauranga is one of the least competitive power markets in the country.
In particular, Powershop CEO Ari Sargent singled out the annual dividend cheque for TrustPower customers from Tauranga Energy Consumer Trust (TECT), saying it had created an "emotional" tie that reinforced its strong market position.
"We had kind of dismissed Tauranga because of the TECT dividend," said Mr Sargent. "Then we did the numbers and decided that customers weren't really better off, which motivated us to go into the area."
Mr Sargent said that even after the rebate, the average Tauranga household was still worse off every year than if they went with a cheaper retailer. Tauranga had the lowest switching rate of any major centre in New Zealand, he added.
In response, TrustPower countered that the methodology used by Powershop to evaluate relative pricing was flawed. "It is correct that TrustPower has retained a high market share," said TrustPower community relations manager Graeme Purches. "But is incorrect to assume that this is due to a lack of competition and that consumers haven't benefited from the price competition available elsewhere in New Zealand. There is competition both in terms of choice of retailer, and in terms of price, with a minimum of eight separate retailers operating in the Tauranga/Western BOP area."