Switched on customers to gain from power firm price war

Some fixed-rate deals come with a price tag. Photo / Filephoto

A haggling war has erupted in Auckland's electricity market as retailers chase customers for long-term commitment.

Power suppliers are undercutting competitors, using reward schemes and even cash to poach customers or encourage them to stay.

But be warned - some fixed-rate deals come with a price tag.

Mercury Energy is charging a $150 fee to anyone wanting to break the company's latest offer - a fixed-rate contract which has a 9.6 per cent price increase over three years.

In one case, a life-long Mercury customer was offered a cheaper rate by Meridian and a $75 rebate on his third bill.

The next day, the Mt Albert man received a letter from Mercury advising him of the three-year offer, which was more expensive than the rate Meridian had just undercut.

Discovering $221 a year in savings in addition to the $75 rebate, he decided to swap. When Mercury found out, a staff member phoned offering him $150 to stay but he switched to Meridian.

Discussions on the topic have emerged on online forums.

On 2.everybody.co.nz, one woman wrote that she switched to Genesis after a call saying the company would cut up to $40 from her monthly bill from Mercury.

"Mercury rang us within a day or two of us cancelling with them and offered us $300 credit if we went back to them."

Another wrote: "I rang Mercury when we were contacted by a rival - they gave us a credit matching the expected savings and when I agreed instantly, they added an extra $20 for time-saving."

Finance Minister Bill English said on Wednesday that the electricity market was not as competitive as it should be and profits were excessive.

Consumer NZ research and testing manager Hamish Wilson agreed but said the current price war was positive for consumers.

"People are certainly in a position where they can do a bit of negotiating, that's for sure.

"If you are offered a special deal from a new supplier touting for business, it's a chance to do some horse trading. Ask your current supplier if they would like to make a counter-offer."

Mr Wilson said Consumer received about 10 enquiries from people wanting advice on Mercury's three-year fixed price offer.

"Looking at the track record over the last 10 years, the odds are pretty good that they'll actually be better off if they take that fixed price offer ... would you bet on [power prices] coming down, or even stabilising?" he said.

Consumer records showed Mercury customers were paying 27 per cent more than in February 2008 but Mercury said that was actually closer to 20 per cent if GST was excluded.