Retailing power games stymie competition

By Richard Braddell

WELLINGTON - Electricity retailer Meridian Energy is writing to "thousands" of new energy customers to tell them that tardiness on the part of their old power companies is delaying their switch to Meridian.

One of the "baby ECNZs," Meridian has attacked the retail electricity market through what is seen as successful marketing in conjunction with Sky Television.

But competing electricity companies say Meridian is now joining the real world in which the changeover from an old retailer to the new has sometimes been taking up to six months.

In the Meridian letter, power marketing director Ray Aspey said existing energy retailers were slow in providing necessary information such as final meter readings, while some line companies were also being tardy with information.

"The effect of this behaviour is to prevent you, the consumer, from exercising the choice you have made in your supplier of electricity. In the competitive market, this is unacceptable," he said.

Meridian's spokesman, Alan Seay, said the number of customers affected was in the thousands. "It's something that's happening up and down the country. Some retailers are cooperating and some aren't."

The chief executive of the Consumers' Institute, David Russell, said the time it was taking to complete a switch to a new electricity supplier was a factor behind a disappointingly low 5 per cent customer churn since the competitive retail electricity market came into effect.

Helped by a grant from the Ministry of Commerce, the institute provides Powerswitch, a page on its Web site (consumer.org.nz) which helps people choose the best power supply deal.

Mr Russell said that if customer churn went up to 10 per cent, then the retailers would have to take notice. But the risk was that the millions of dollars spent over 10 years of argument about electricity reform would be viewed as the cost of an economic theory that had come to nought.

A similar concern was expressed by an electricity company executive who said that game-playing to protect their positions had been a feature of the incumbent response, but simply coping with the sheer complexity and expense of completing changeovers to a new supplier had become difficult enough on its own.

Newcomers to energy retailing also highlighted the practical difficulties facing an industry with systems - designed around captive customers - that had to be upgraded for a competitive market.

Even a final meter reading could erode much of the cost saving in switching to a new supplier and an incumbent had little reason to make it a priority if it was bearing the cost.

But getting effective information system and other industry protocols to facilitate the market appear some way off.

The executive said their timely development would underpin what could be a lucrative export of expertise derived in the very short time the market had been opened to competition.

Bruce Thompson of Contact Energy said the market had not worked smoothly, but energy companies were faced with integrating as many as nine separate operating units at the same time as they were attempting to make systems compatible with a competitive market.