Recently Meridian established a new retailer in the electricity market, called Powershop. The marketing tells me that:
Powershop is a revolution in the way you buy power. We’re the world’s first online energy store, a retail outlet where electricity suppliers compete for your custom. This brings you a whole new level of choice and control over the way you shop, helping you save money and power.
Effectively you buy electricity in kWh units. You choose how many units you buy and for what period. The price of the electricity varies, depending on how you buy it. For example, if you buy a ‘bulk’ pack, you can typically get a cheaper per unit price than if you buy units in smaller bundles.
At the moment, with Southern Lakes brimming, prices are far cheaper than competing retailers. For example, the cheapest retailer that I could access in Wellington was charging 21.6 c/kWh (taking into account their discount), as well as a daily rate of around 80 c/day. Compare this to Powershop, where I have been buying electricity at around 18-19c/kWh, without any daily charge, and you can see the potential for savings.
The obvious risk from buying through Powershop is hydrological. Meridian (currently the only ‘major’ retailer on Powershop) generates the vast majority of their electricity through South Island hydro generation. If there was a dry winter, I imagine that prices over this period would be higher than that charged by a fixed-price, variable volume contract typically offered by other retailers. Thankfully Southern Lakes are brimming, so that shouldn’t be a problem…
…so long as the power can get from the South to North Island. Just this week the HVDC link that connects the islands tripped, meaning that the islands became electrically separated. As such, Meridian wouldn’t have been able to get their generation north. The threat of such an event occurring again means that Meridian will have to price this into Powershop rates.
At the very worst, if winter prices raised significantly due to hydrological/transmission problems, one can always switch back to another retailer, as Powershop has no contract term (switching costs are pretty low in my experience. I think I’ve changed retailer three times in as many years).
One nifty, if somewhat surprising, trick that I’ve been able to perform on Powershop relates to refunds. The other day I purchased a large block of electricity for just under 20 c/kWh. Later in the day I saw that the price of this unit had fallen to just over 18 c/kWh. I was able to refund the initial purchase and buy the cheaper power.
My experience with Powershop has been entirely positive and I’d recommend it if you can be bothered devoting a little time to your electricity purchasing (hell, even if you can’t be bothered with the transaction cost, you can set a default electricity product to purchase when you run out).