Contact chairman Grant King addresses the company's annual meeting. Photo / Brett Phibbs
Contact chairman Grant King addresses the company's annual meeting. Photo / Brett Phibbs
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A top sharebroking firm estimates Contact Energy will lose 5 per cent of its customers by the end of next year because of a consumer backlash against its price rises and failed attempt to almost double directors' fees.
Forsyth Barr has downgraded its target value for the company'sshares as a result of last week's public relations disaster, which prompted thousands of householders to inquire about switching suppliers.
Forsyth Barr financial adviser Ken Lister said the negative sentiment surrounding Contact's price hike and proposed increase of directors fees reached a "crescendo" at its annual general meeting on Thursday and he expected 5 per cent of customers to go elsewhere.
He described the announcement, just before an election, as "ill-timed". Contact has 650,000 retail electricity, gas and lpg customers.
"Anecdotal evidence indicates that the negative sentiment has translated into customers switching to alternative supplies.
"We are now forecasting that Contact will lose 5 per cent of its retail customer base by the end of 2009," Mr Lister said.
However, he noted Contact would still sell all the electricity it generated, about 28 per cent of national output, and the loss of some of its retail base would be taken up by commercial or wholesale clients.
Forsyth Barr downgraded Contact's target 12-month share valuations by 3 per cent to $9.88, but maintained a "buy" recommendation on the stock because Contact was building gas storage facilities and there was more power generation becoming operational soon. Contact has been trading about $7.12.
