Slow take-up to Powershop services

Powershop aims to sign up 40-50,000 customers within a year.

Public response to online energy retailer Powershop since its launch four weeks ago has been slow off the mark, with just over 400 people signing up to their services.

Chief executive Ari Sargent says he didn't really have any expectations for the first few weeks.

"It was more about building brand awareness and introducing ourselves to the market place," he says.

The aim is to sign up 40-50,000 customers within a year, but in order to reach that target the take-up rate will need to increase.

"We are reasonably pleased with what we've achieved ... but in the medium term we do need that level to go up."

Sargent has been working on Powershop for two years and says it's not a new idea.

"People have been thinking about how to turn electricity into a consumer good rather than a utility for a long time," he says.

The original plan was to put electricity onto supermarket shelves - literally - selling tokens and top-up packs in stores.

But logistic hurdles saw that strategy being shelved, and Sargent now sees the internet as the best way to deliver Powershop's services.

Powershop gives customers the ability to change providers and plans at any time and monitor their day-to-day usage. Its online model means overheads are lower and power is billed on a cost-per-unit basis with no extra fixed charges.

Consumers can buy power in advance and lock in prices, pay as they go or pay in arrears.

And with electricity prices rising over the last 12 months, cost pressure on everyday households is increasing.

Simply Energy supplies power to businesses, connecting independent generators to commercial and industrial consumers. Chief executive Stephen Peterson says Powershop is a nice idea, but "I don't think consumers care enough to be logging on every day."

Sargent says that Powershop sends out weekly email alerts and can automatically purchase power for customers who run out.

"It's not a big deal...it's a perfectly acceptable way to use our service."

But Peterson believes Powershop's biggest hurdle will be their ability to bring other retailers on board.

"I would be concerned about exposing our pricing and transaction flow to a competitor," he says.

As a subsidiary of Meridian, Powershop currently offers plans from Meridian, Power Kiwi - which purchases its wholesale electricity through Powershop - and Powershop itself.

Powershop is available in the Auckland, Wellington, Christchurch and Dunedin regions.