Power company churn soars to 30,000 a month

By Susie Nordqvist

Photo / Mark Mitchell
Photo / Mark Mitchell

About 30,000 customers are switching power companies per month as the battle for new customers heats up and consumers chase better deals.

A report by PriceWaterhouseCoopers shows the rate of churn has increased significantly over the past two years and is now at its highest level since August 2001.

PWC partner Chris Taylor said retailers were more aggressively targeting certain customer segments, while customers were changing supplier to seek out savings.

Consumer NZ says a small household can save up to $442 a year by switching providers, while the savings for large households were much higher.

The report shows Contact Energy was hit the hardest, after controversy over directors' fees in 2008 - when it lost 40,000 customers in six months.

However it still has one of the biggest portfolios of customers, with about 489,000 ICPs (installation control points).

Mighty River Power's Mercury Energy and its subsidiary Bosco Connect posted the biggest gain, increasing their customer base by 84,000 in three years to about 436,000 currently.

Mercury Energy is offering fixed rates to selected Auckland consumers who must pay higher tariffs now to qualify for the deal, but face no increases until 2013.

The three-year deal would help the company to fend off competitors, a spokesperson for the company told the NZ Herald.

Among deals from other companies are a day's free power every week over summer and $75 credits for switching to them.

Genesis Energy has dropped about 48,000 customers over the past three years, while its Energy Online business acquired about 7000 customers.

The realignment of generation portfolios, as a result of the Ministerial Review, provided the companies with the opportunity to realign retail loads to match reshuffled generation, Taylor said.

"Someone like Mighty River Power who has added a whole lot of generation has also increased their customer base quite significantly - there's a natural hedging mechanism," Taylor said.

However increasing churn led to higher costs for retailers to acquire and retain customers, putting pressure on retail margins, the report said.

A number of companies were also experiencing bad debts when people changed from one provider to another without settling their accounts.

"Previously it would not have been a problem, but with the issue of churn, it's becoming harder for retailers," he said.

"At the moment there does not appear to be a mechanism whereby a company can stop a customer from changing until they have settled their bills," he said.

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