Powershop saves me 32.5% at the moment

So Powershop lowers switching costs, but as you can see from the headline it also lowers actual costs.

So how much can you save? If you are like me – then a lot.

I was using Contact, who like the other companies, charge in two ways – cents per unit consumed (kWh) and a service fee. Powershop charges just c/unit and does not have a service fee.

Contact Prices
It’s hard to compare last year with this year, beacause there have been some tasty prices rises in the interim.

Between my September 2008 and January 2009 bills the daily “One Meter Managed” service charge rose from $0.9811 to $1.102 – a 12.3% increase. That’s an impressive increase in a recession, and not justifiable on what has to be an almost entirely local cost base.

Meanwhile my kWh price from Contact rose from 17.292 to 19.059 c/unit- a 10.2% increase. That 19.059 cents is before GST – so the actual price per unit is 21.44 c/unit after GST.

The average home uses 8000 units per year, or just under 22 units per day. At that rate the $1.102+GST charge is equivalent to 5.66 cents per unit, making the actual price per unit 27.0977 c/unit. This is the rate to compare to the Powershop rates, which include GST and service fees.

I save 32.5% at the moment
The cheapest Powershop charges for me right now (they vary by location, time and usage) are 18.36 cents per unit, including GST. (Our own FlowerPower and Powershop’s Standard Power are both at that rate.) That’s 32.25% less than Contact’s price per unit including daily charge of 27.0977 cents.

32.5% is a staggering difference for an industry that is meant to be low margin.

However the Powershop prices do change by season – and we are in a relatively low price season (for Wellington) right now. Winter is the peak period, and Powershop is selling me power in advance for winter at 22.49 cents. That will rise as winter approaches, but as 22.49 cents is still 17% lower than the 27.0977 cents that Contact charges I feel optimistic that the Winter rate will still be less. (I don’t know – our margins are tiny and the wholesale price dictates all).

Now I was away for most of the time during December/January, and so the impact of the daily rate was much higher in cents per unit terms. That 18.36 cents per unit was almost HALF (52%) of what I paid per unit for December January. (Your results WILL vary, but this is astonishing)

Do this using your own power invoices (we will work on handy calculator) and prepare to be shocked.

Find your cents per Unit (kWh) rates on your bill, add 8 cents per unit to them to make them comparable, then compare with Powershop’s rates. (8 cents is 5 c/unit for daily charges and 3 c/unit for GST).

So sign up to Powershop and save, and sign up with via this link and get $20 free “sign-on bonus” electricity as well.

Up next – FlowerPower and Powerkiwi.

Published by Lance Wiggs


9 replies on “Powershop saves me 32.5% at the moment”

  1. Stupid question, but why not just take the entire monthly bill amount less whatever discounts, and divide it by the kWhs used?

    On my last bill with Mercury, I ended up at 22.67c per kWh or unit. With Powershop, I pay up to 19% less then. Without the prompt payment discount, I’m looking at 25.2c/unit.

    Am I missing something here?


  2. Yes Juha – you are right. I did the same and came up with 27 cents for one month and 35.3 cents.

    Breaking it down as I did makes it easier to see why the difference is there. I like using c/units as that is how Powershop prices.


  3. Doesn’t look like you factored in the prompt payment discount (PPD) you probably currently get – which lowers their price by 10%. Powershop don’t offer PPD.

    I’m with Mercury, fixed for 3 years, and get 10% PPD plus 2% easypay discount plus a dual fuel discount of $0.15 per day (also get gas from them). All that adds up to 22c/kwh, and i get it for another 2 and a half years, no matter what the season. Can’t really beat that.



  4. On another note, I see from Powershop’s terms and conditions this:

    “5.3 Powershop does not accept responsibility for any offers or benefits attached to or accompanying energy credits offered by participating suppliers (except in the case of energy credits offered by Powershop). If a supplier has failed to honour any offer or benefit attached to or accompanying energy credits, you must take this up with the supplier in question.”

    I’m wondering whether this means that if you buy future credits, but the retailer goes bust (as does happen from time to time in the NZ energy market) then you’ve lost your money.

    Have tweeted this question to powershop. Can you shed any light on this lance, given you’re involved in flower power and the green power company?


  5. I don’t get it – I spent an hour collating my last years bills and figure I can save $15. Why bother?


    1. Chris – The level of savings you will or won’t get depend totally on how crappy your current pricing is. So I guess the upshot is if powershop doesn’t save you very much, then at least you know you’re getting a good deal with your current provider.

      A highly simplistic explanation is that the NZ electricity market is geographically segmented: generators typically want to service customers close to their generation in order to lower risks to them of transmission failures between their customers and their generators.

      So generally, they want to be in some geograhpic regions more than others. But pay them enought money, and they’ll do business with you anywhere.

      Also, some retailers compete heavily on price, and hope they’ll make a good profit if volume increases significantly. While others charge higher prices, knowing that many customers generally arent that savvy to what price they get currently and can’t be bothered shopping around.

      And then some retailers behave the first way in one region, and the second way in another.

      Powershop (or indeed consumer’s http://www.powerswitch.org.nz site) really helps those customers that are currently with power companies that aren’t actively competing in that particular region, or it helps customers that until now couldn’t really be bothered checking to see if they were on a good deal or a bad one.

      Sometimes a customer will save peanuts, sometimes they’ll save coconuts. Unfortunately as you’ve pointed out, it takes you a bit of effort to find out. Kind of like a lucky dip, where everyone gets a prize for their $2, but most prizes are only worth about $2, while only a few are more valuable.

      I’ve seen small businesses (pubs, motels etc) save $6k per year just by swapping from a power company that wasn’t competing heavily in a region to one that is.


  6. Jeff – good point about the PPD. Not all power companies offer this, but mine did. Given that I had prepaid for about a year (their screw-up not mine) I received the PPD each time.
    That’s 2.7 cents off their 27 cent price then, giving 24.3 cents. I dare say that’s still high.


  7. “The details of all the offers (terms and conditions, FAQs, and expiry dates) are easy to find when you click on the product title.”

    It seems like you have to sign up before they show you this. It’s hard to make judgement if it’s worth signing up without seeing this.


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