Competition heats up in Auckland

Competition in the Auckland retail energy market is set to intensify with the entry of a new player, Nova Energy, which offers to fund householders into solar water heating.

Throughout the country monthly rates of switching between power companies have hit levels not seen for seven years in a shakeup sparked by the exodus of 41,000 customers from Contact Energy and that company's efforts to win them back.

Door-to-door marketers in Auckland from Contact are offering $80 bonuses to new customers while Mercury Energy, the single largest beneficiary from Contact's pain, signing 33,000 new customers in the past year, is offering its own bounty rewards to undercut competitors.

Nova Energy is part of the Todd Energy group and has steadily been moving up the country with a solar water heating, gas and electricity plan and so far has attracted 30,000 customers in Wellington, Taranaki, Waikato and the Bay of Plenty.

They pay for the solar units through their power bills over five years during which they are locked into an energy contract, but the company is touting the benefits of no interest, no deposit, no up-front fee and nor having to arrange finance.

A spokeswoman says the average total cost of installing a solar system is $5500 and costs are reduced by a $1000 Government solar energy grant.

The company will soon start a telemarketing campaign in Auckland to identify householders wanting an assessment of suitability for solar water heating. A solar hot water system can provide up to 75 per cent of a home's hot water needs every year which, according to Electricity Commission figures, make up 26 per cent of residential power bills.

Nova produces its solar panels at its factory in Tauranga.

The company sees the solar offer as an important point of difference from the the five big generator-retailers and sees the installation market as largely untapped.

The rate of installation has declined since 2006 and the company says that only around 40,000 of 1.7 million homes have solar hot water heating.

Across the country Nova Energy has about 6 per cent of the gas market and is already active in the Auckland area selling commercial natural gas. With Mighty River Power, Nova has been the beneficiary of churn in the gas market.

Customers switching electricity suppliers in July numbered 24,621, up almost 6000 on the same month a year earlier, according to the Electricity Commission.

A surge in switching coincided with fallout from Contact's annual meeting last October.

Mercury's general manager, James Munro, said his company saw a fantastic opportunity in customer dissatisfaction with Contact.

Mercury had already been in a direct mail, telemarketing and door-to-door campaign to pick up business.

He said Contact was now fighting back very hard.

"That blip is not carrying on now, they're in the market competing very hard."

Munro said retail deals changed by the week and price comparisons on Consumer's Powerswitch site did not take into account any bounties that "occurred below the line".