Genesis overtakes Contact as largest electricity retailer

File photo
File photo

Customer losses at the country's largest NZX-listed energy company, Contact Energy, appear to be accelerating as a customer switching campaign by the Electricity Authority prompts thousands of people to change their power retailer.

Last month was the biggest month for customer switching so far recorded, with 43,920 switch requests initiated, spurred by the "What's My Number" advertising campaign.

It encourages electricity consumers to find the most competitive power prices in their area and emphasises that switching is easier now than the slow processes of a decade ago.

In the month of June alone, Contact lost 7679 customers, according to EA statistics issued this morning, with total customers under the Genesis Energy brand exceeding Contact customer numbers for the first time, according to EA charts going back to July 2003.

Both Genesis (470,060 customers at June 30) and Contact (464,057 customers) have been on a declining trend throughout that eight year period.

However Contact's decline has been more marked since September 2008, when the company mishandled directors' fee and electricity tariff increases at a time when retail electricity marketing was becoming intensely competitive.

In three years between June 2008 and June 2011, the EA figures show Contact has lost 11.9 per cent of its customer base, by far the largest fall in customer numbers of any retailer, and compares with a 3.8 per cent fall in Genesis customer numbers.

Genesis also operates a sub-brand, Energy on Line, which had a further 63,244 last month, down slightly on the June 2008 total of 64,271.

Between those two dates, some 59,217 customers have gone to small-scale competitors Powershop and Pulse Utilities, coincidentally close to the 62,566 customers lost by Contact during those two years.

Meridian subsidiary Powershop had 2,189 customers two years ago, in June 2009, and 33,419 at the end of last month. Pulse Utilities had 7304 customers in June last year, and 25,798 at June 30 this year.

However, last month was Powershop's busiest ever for acquiring new customers, said its chief executive, Ari Sargent.

"Small retailers are the ones driving greater competition in the market, and the campaign has shown consumers how easy it is to switch and get a better deal," he said.

However, Pulse has lost $31 million since its creation in 2000, and warned last Friday its loss for the year to March 31 would be $7.6 million, rather than the $6.6 million loss initially reported, owing to larger than expected bad and doubtful debts during the year.

Its managing director, Dene Biddlecombe, this week accused larger players of targeting its customers unfairly by highlighting Pulse's financial situation. The company has reduced its customer acquisition targets under a rescue deal undertaken with the West Coast network company, Buller Electricity.

The other big loser last month was Mercury Energy, which dropped 1300 customers in June, to a total of 379,476. Mercury aggressively pursued customers through 2009 and 2010, peaking at over 420,000, but has allowed numbers to slip subsequently.

Contact has indicated in recent months that customers are being acquired by competitors at uncommercial rates, and that it prefers to ride out the current wave of competition rather than slash its margins for customer growth.

The company is also in the process of refreshing its marketing team under its new chief executive, Dennis Barnes, who has recently appointed Mike Heath, the general manager of the online deposit-taker RaboDirect, to a senior marketing role.

The shares fell 1.7 per cent to $5.19 in trading today, and have declined 13 per cent this year.

- BusinessDesk

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