New entrant to 'tough' power market

Simon Young, Utilise executive director. Photo / Supplied

Electricity retailer Utilise is entering a "very tough market" with a lot of competition, according to Forsyth Barr analyst Andrew Harvey-Green.

Utilise, which is owned by Opunake Hydro, launched yesterday and will focus on smart meter technology - now being rolled out around New Zealand.

The new technology allows energy use to be measured remotely, meaning customers can be charged based on up-to-date energy consumption.

Utilise executive director Simon Young said the technology was aimed specifically at businesses and meant they could tailor a plan to suit their specific energy needs.

"With smart meters we can measure electricity usage every half-hour, so businesses can really benefit from lower off-peak prices," Young said. "Sixty per cent of hours in a week are actually off-peak. There has to be some savings here for businesses."

Utilise is one of a number of new electricity companies that have entered the market in the past year, and despite the smart meter offering, Harvey-Green said it was still a highly competitive sector. "Clearly they have a view that there's room in the market and that they can make some money out of it and I guess time will tell on that one," he said.

"The best example we've got at the moment is if we look at Pulse, which has around 60,000 customers and is only just at the break-even point so it's taken a number of years to get to that point and they've spent quite a lot of money doing so.

"It is a very tough market and we're seeing retail margins go backwards for the main guys.

"But it is interesting to see so many newcomers come into the market and think that there is good money to be made there."

Harvey-Green said he expected a number of other electricity retailers would start using the smart meter technology more as it was rolled out around the country.