Powershop lowers switching costs – and that is good

A while back Ari from Powershop gave me, and a few others, a demonstration of Powershop – a new way to buy electricity. It’s pretty cool – you can choose which supplier you buy your units from each time you buy.

I loved the idea. It reduces the pain and cost of switching from one supplier to another to zero, and so means the market for consumer electricity is more efficient. This means you can continuously chose the cheapest option, rather than only get offers for lower prices once you switch away.

In short – cheaper electricity.

I liked it so much I bought the we (a few of us Kiwi bloggers) formed a company – PowerKiwi. PowerKiwi provides (so far) two products on the Powershop site – FlowerPower and The Green Power Company. More on those and Powerkiwi later.

Anyway, despite Contact disconnecting both my gas and my electricity without reason in the past, I had stayed with them, as I figured the others were just as bad, the issues were with the industry and most of all the pain of switching was just too high.

Enter Powershop.

Switching to Powershop was really simple – a web form to fill in, with no paper involved, and no paper ever in the mail. I had an old power bill handy, which sped things up as I could enter my “ICP” number. After being disconnected when my neighbours moved, I am glad that I can give the industry their own number to identify me.

However Contact Energy is still managing to have their day.

I had a dual account – gas and electricity, with a credit balance on the account. When I transferred the electricity account to Powershop they split the account into two –  gas (continued) and electricity (paid off and stopped).

Contact managed to place the remaining credit on to the dead electricity account (they now owe me $50), while I received a bill for the gas account – for about $50. Muppets.

I’m also starting to receive unsolicited mail from Contact – telling me how I could save if I signed up and how much they would like me to, err, call them (and wait on hold). Sorry – no. Please stop wasting paper. And calling them, their competitors to shop around for the best prices is just far too much pain.

My February bill was negative, as the estimated meter readings had been incorrect. That meant that Contact got to use my money before it was rightfully theirs.

All this is “switching costs”.

Most of us (Powershop market research says) are paying more than we could be for electricity – and we are  doing so because switching from company to company each time the price moves is far too painful.

It is also expensive for Contact and their competitors. That marketing material costs money to create, print, customise, find addresses for and to mail. It’s also messy at the letter box, destructive of our resources and, well -it’s called junk mail for a reason.

Because I can enter in my own meter readings, I will catch any “coffee shop” readings and wildly wrong estimates – so called because the meter reading is made while the meter reader is sitting in a coffee shop. I can understand that it’s hard to trek up to the top of Roseneath in the wind and rain, but now at least I’ll know when that happens.

I can also pay for my electricity when I want to – each week, month or in arrears automatically. I’ll get discounts for paying in advance – be it next week, month or even for winter. Contact sends a monthly bill – and strangely enough my December/January bill was for 35 days – a nice end of year bonus for them.

So if you are convinced – then sign up, and get $20 of free electricity when you do from FlowerPower (use that link to get the $20).

Need to know more? Check out the next post to see how much I saved. It’s shocking.