Volatile Spot Market Causing Retailers to Leave Market
The increase in power prices have hurt more than Kiwis: they’re causing certain electricity retailers to leave the industry.
Three independent electricity retailers are predicted to close in the near future due to the recent exceptional increase in wholesale electricity prices. The situation has seen energy prices spike from less than ten cents per kilowatt hour to over 100 cents. October 2018 saw the highest October whole price average ever recorded at $300 per MWh.
Wondering why there’s been a price increase and what’s being done about it? We’ve got the answers for you about the current energy price spike.
Retailers Lacking Enough “Hedging” Are Suffering the Most
Wholesale prices have more than quintupled recently. Since lake levels persist to be low and gas production has been reduced, wholesale prices are expected to remain high.
Since smaller retailers have limited amounts of power that have been locked in at a guaranteed price, they are the ones most likely to suffer from the price increase.
Power Direct Encouraging Current Customer Base to Switch Retailers
Nelson-based retailer Power Direct is no longer accepting new customers and is urging its current customer base to switch to another retailer.
Otago power retailer Payless Energy also blames market volatility for its departure from the energy market.
Other retailers are making changes, too. Flick Electric is now offering its 24,000 customers a “fixie” contract with a six-month term. One-fifth of their customer base opted for the fixed contract within the first week it was offered.
Manipulation by the Big Five Power Gentailers?
Both the Electricity Authority and the Government have been asked by certain retailers to investigate the current price spike.
Four independent power retailers are concerned that independent competition is being threatened. As a result, householders are losing out as wholesale prices continue to rise.
Complaints from independent retailers Pulse Energy, Electric Kiwi, Vocus Communications and Flick Electric have included concerns that gentailers aren’t transparent or justified.
The price increase is similar to 2008 when there was a genuine shortage of electricity due to the unprecedented dry winter.
Although the Electricity Authority is monitoring the situation, no intervention is currently suggested.
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With the current energy price spike, it’s more important than ever to ensure you’re getting the best rate on your energy costs!