Mercury powers up for a double energy sales challenge

By CHRIS DANIELS, Energy writer

Mercury Energy is moving into the gas retail market and will start selling gas to many of its Auckland customers from March.

General manager John Foote said the option of paying for gas and electricity on the one bill would initially be offered to customers in Auckland City, Manukau City and most of Papakura.

This means Mercury, owned by the state-owned enterprise Mighty River Power, will go head to head with Contact Energy, which also sells gas and electricity.

Mercury has arranged to buy gas from Wanganui Gas, a small company three-quarters owned by the Wanganui District Council, and one-quarter by NGC.

It supplies gas to big commercial users in Auckland, such as Sky City and the Carlton Hotel.

It had operating revenue in the year to July of $10.2 million and a tax-paid profit of $1.3 million.

Wanganui Gas general manager Trevor Goodwin said the small company was not interested in selling gas directly to Auckland households.

"We really just want to sell more gas," he said.

"We're not megalomaniacs, we're not trying to have the largest customer base in the country, we just want to shift more gas."

The most appropriate way to do this was by choosing a partner that had a good brand in Auckland and wanted to get into selling gas.

Mercury would do all billing and customer service, and Wanganui would supply the gas.

Mercury would eventually extend the option of buying gas and electricity to more customers, but not until later in the year.

The area in which Mercury will initially sell gas has about 40,000 gas users, almost all buying from Contact Energy.

Mercury will aim to win over Contact gas customers who already buy electricity from Mercury.

It is pitching itself as providing a better service, rather than aggressively competing on price, planning to read gas and electricity meters at the same time every month, rather than every two months as Contact does.

Contact, which has sold electricity and gas to customers since 1999, began putting both services on the same bill only last March.

After many electricity retailers earned bad reputations by aggressively chasing down customers without having the necessary systems to look after them, Mercury is moving into gas retailing at a restrained pace.

"We plan this to be a low-hassle, good-service option, so we'll be moving at a pace to ensure that this service can be maintained," said Mr Foote.

"Ultimately, we want to be able to offer these sorts of things wherever the Mercury brand is but, for the moment, one step at a time."