I’m actually shocked that Mercury energy have the cheek to do this scam. They are sending out notices to people (families) offering to lock in electricity prices for the next three years. They also say you could win free power for 3 years:
The problem is that people will be signing up for a staggering 36% increase in power.
Put bluntly – the average family in Auckland would move from paying $1940 per year to paying $2640 per year, a $700 increase. That’s $13.46 per week.
Meanwhile only ONE family will win that free power, and no suggestion of what your odds of winning actually are:
And of course there is an extra surprise in the fine print – a $150 early termination fee. At least you don’t have to pay it if you move to another place (most people move within 3 years) – so long as you choose Mercury as your supplier.
Although sadly Mercury do not supply the whole country – missing out Gisborne, Nelson, Invercargill as well as the much more popular “overseas” or “I now live in another flat or with someone else”
Shame on you Mercury Energy. You are offering to lock in customers for years, making them pay a huge increase in price, and giving essentially nothing in return.
Your competitors (and perhaps yourselves) are offering large cash bounties to those who threaten or do switch, but you are making people pay to stay.
My advice to everyone is to switch electricity suppliers often to make sure you are getting the best prices. You may even find that you get a phone call from your current suppler shortly thereafter – I’ve heard of people being offered $300 to stay.
Disclosure
I am a co-founder of PowerKiwi, which is a electricity retailer selling FlowerPower and other products on Powershop, so yes, we are in competition with Mercury. We are tiny in comparison of course, and even Powershop itself is tiny versus the other retailers. Click the flower above to sign up and get $50 of free credit. I cannot talk about how much you will save, as we don’t know and each case varies, but the stories we have heard are impressive.
Lance Wiggs 
Nice post, it’s good to be wary of offers like this, however I can’t see how this offer is a 36% price increase.
The numbers in the letter show an increase of 11% in the daily charge and 12% increase in the unit charge. The overall increase would therefore be somewhere in between those numbers.
But an immediate price hike of around 12% isn’t all that cool either.
Their figures show that over the last 3 years there was an increase of 18%. If that trend continued, and was averaged out over the next 3 years, then you’ll only do better in the third year. Who wants to stay locked to a company for 3 years?
Not me, I declined the offer.
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Agree – I couldn’t see how the figures supplied by Mercury equate to a 30%+ increase.
I think Lance has assumed that the average price quoted in Mercury’s letter equates to 8000 kWh usage.
But the letter doesn’t mention the kWh usage of that “average household bill”, so there’s no ability to draw Lance’s conclusion. PowerSwitch notes 8096 kWh as the average consumption of a “medium sized household”, but nor can we assume that is also the average for all Auckland households.
As per Dave’s comment, it looks more like an 11 – 12% increase, which would imply a reasonably priced hedge on future fluctuations.
Ort am I missing something? Are all “average households” always assumed to be 8000kWh users?
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8000 is the industry standard for the size of consumption for an average household. L
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Not nice!
Meridian did a similar thing via a door to door sales approach but they took my current bill and locked that price in for 12 months with no early termination fee and a slightly higher early payment discount.
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wow that lack in for 3 years – something really to watch for. Got Hammered this year by “low estimates” from another company, then a sky high actuall reading (in summer- winter I could understand)
Even after adjusting estimates, it happened again.
After the application went in for change, then they try to call me and invite me back! A lesson in customer service, keep in touch, try to ask BEFORE it becomes a problem for the secind time!
Paul
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Me also have heard of people being offered $300 to stay.
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Numbers aside, it’s an insidious stunt by a faceless power company. I got the offer one day, and two days later they followed up with a “we’e going to put up your power prices” letter. (” … the need for significant investment across the electricity industry … “; what investment exactly?)
Sod ’em. We’re converting to gas hot water on Monday. That’s a huge chunk of my power bill that Mercury and its greedy master the government won’t be getting anymore.
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How much did it cost you to convert to Gas Hot Water? Can you explain how this process is done, as I am thinking of doing something similar.
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It was already there when I moved in, so I cannot answer that one sorry. I’d check out noCowboys.co.nz and get some quotes. L
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We were going to change late last year when Mercury phoned, gave us the valued customer (easy to rip-off) speach. They then offered us an assurance their prices would remain stable for 12 months and a cash incentive to stop out transition to another supplier. God we hardly made the arangement and the prices have gone up. I have another supplier doing a quote for me today.
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The figures you come up with in this article are frankly nonsense.
You have your rates before and after the rise and hence could have calculated a percentage increase based on those numbers, but you chose not to do so, The rates you are being offered are specific to your own situation, not to the average customer.
If we assume you use 8000kWh then your annual bill would increase from $2068 to $2296, an increase of almost precisely 11%.
I don’t know if you are being dishonest or just terrible at maths.
I suspect you live on the North Shore, where line costs are much higher and therefore bills are significantly higher than they are south of the bridge for the same usage – hence the different from ‘average’ bills. Average annual usage is closer to 7000kWh than 8000kWh in Auckland anyway.
The thing is, you are in the industry. You must KNOW this stuff, surely? So what are you trying to pull here?
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We locked in the 3 year fixed plan with Mercury from 04/2011 and their retail price was always lower than what we fixed in. We were overcharged for the last 2 years. Funny enough, recently they sent a letter which says Commerce Commission will force the power price down from April this year. To make sure we are not missed on the price cut (as we are fixed until 2014), we are offered to extend the fix for another year until 2015. Ridiculous, really stupid Mercury. So when Contact knocks on the door and offered to fix for 3 years by 20% less than we are paying, we don’t need to hesitate to just switch over. Contact will also subsidy for the $150 break fee.
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