This is one of the major factors that impact the Small to Business customer market. Let’s be honest to each other, most of us (Small to Medium Business owners) are either too busy or do not have enough exposure to the Energy market to keep a track of latest volatility that is increasing the price of Energy day by day.
Most of us tend to look for a new provider in the March every year as we are shocked looking at the price increase letter from our Power & Gas company. Well, that not our fault - The common perception is that we think every time we change companies, we will save money. That is not always the case. If the Energy Market price is going up, the new offers from each provider will also be high.
In order to understand this concept, we have to understand how the Energy prices in New Zealand works (I can write pages and pages on this, but then you won’t read it, so will be as brief as I can).
Energy Market: Energy market in New Zealand is divided into 4 layers – Generators, Network Companies, Retailers and Consumers (You and Me).
The Generators (Todd, Genesis, Mercury, Meridian etc) generates Energy (Electricity and Gas) at their Generation assets (Lake, Wind Farms, Thermal sources, Gas fields etc). Whatever, Energy is generates across the country by all the Generators, it is then put into a big bucket called “Transpower”.
This Energy is then transferred to various “Network Companies” like Vector, Orion, PowerCo dependent on the area you are located. The network company distributes and supply the power at your house and business through the Energy network they own. They are the enablers of the Energy to your premise.
The retailers (Genesis, Mercury, Meridian, Contact, Nova) in the market must purchase the Energy from the Energy Market (sometimes referred as ASX) which works exactly like a share market.
They have live traders working round the clock buying and selling blocks of Power at the ASX Prices. Will not go much deeper as it will get complicated from here. This ASX price impacts your cost of Electricity for your business. The degree of impact will depend on the type of meter setup you have on your business.
Non-Half Hour Meters: Most of the Small – Medium size business in New Zealand have Non-Half Hour Meter (NHH) meter setup. In this you pay a flat rate per unit (kWh) used for your usage. The rate is usually flat for most part of the year. The network & retailers review the pricing every year that can change your per unit cost.
The ASX Impact: During the annual price reviews (usually from 01 April), the pricing teams in the Retailers will determine the Average accounting price for the ASX for the next 1 year and then base their cost on this. If the ASX have been increasing entire year and future Hydro lakes levels are looking low, the accounting price will be high and hence you will be getting a price increase letter from your provider.
Time of Use Meters: This meter is mainly used by Medium sized business needing high-capacity meters on site. These meters read the usage every half hour and transmits it back to the metering provider. The pricing for these meters is dynamic where you will have a different price for each 4–8-hour block of power for each month. Basically, you will have 144 different prices for the year instead of 1 flat rate as in the case of NHH Meters.
The ASX Impact: This type of price is related to ASX price. The prices are determined based on the futures ASX at the time of contract signing. The futures ASX will have a different price each day and it depends on term and month that you sign it. This is the reason, most of the time you only get a time of 2-3 days to decide and sign the contract.
How Manage My Bills Can Help You
Manage My Bills is an independent Energy Management company that specialises in understanding the energy market conditions. We understand the changing market and the right time to act. It’s always about the timing.
We also use our strong negotiation skills and bulk buying capacity to get the best price for your business. The most important thing is that we are Independent. This means that we do not get paid by ANY power or gas company, hence we have no reason to be biased towards anyone.
You are our customer, and we work for you. Hence, whoever gives us the best price for your business, we will recommend that to you. We are not a Sales company; hence we will not leave you as soon as you sign with us. This is where our work starts. We audit your bills every month to ensure there are no billing errors, the rates match what have been offered to you, and price optimisations.
Price reviews: Even if you are in a contract with our recommended provider, it does not stop us from looking for a better rate for you. We do annual reviews and if there is a new company offering better rates than your current (>5% savings), we will recommend that to you. Of course, we will take all the cancellation costs into consideration.
For all this, we only charge a small monthly fee that always comes from the savings that we achieve for your business. If we can’t save you money, we don’t propose you to change at all.
So don’t get shocked when you see a price change letter next month, just get in touch with us and we will evaluate that for you.