Electric Kiwi believes that it’s time for the government to step in and address the excess profits these incumbent ‘gentailers’ are extracting from the electricity market.

Record-Breaking Profits Raise Concerns

The ‘big four’ gentailers have seen their profits soar since the onset of Covid-19. Year after year, they have reported record earnings before interest, tax, depreciation, amortisation, and fair value adjustments (EBITDAF), totaling a whopping $2.61 billion in 2023, compared to $2.28 billion in 2022. To put these numbers in perspective, that’s over $7 million in profits every day, while many Kiwi households struggle to make ends meet.

What’s even more alarming is that these gentailers’ wholesale profits, derived from electricity generation, now surpass their company-wide profits. In 2023, wholesale profits reached a staggering $2.64 billion, exceeding the total company-wide profits. This shift has occurred due to two key factors.

Squeezing Competition through Subsidies

Firstly, the ‘big four’ have leveraged their market power to maintain high prices in the wholesale electricity market. This has allowed them to extract substantial profits from generation activities. Secondly, they have shifted profits from their retail businesses to their wholesale arms, essentially subsidising their retail operations with the excess profits generated from electricity generation.

For instance, Genesis reported a retail profit of $172 million just two years ago, significantly higher than its wholesale profit of $144 million. Fast forward to today, and Genesis’s wholesale profit has ballooned to a record $520 million, while its retail business is operating at an $11 million loss. Sadly, these drops in retail profits have not translated into savings for customers but have instead fueled the wholesale business.

The Impact on Competition and Innovation

The consequences of this profit distribution scheme have been dire for competition and the retail market. Over the past five years, more than 20 small and independent retailers have exited the market. Without healthy competition, consumers can anticipate rising prices and declining service quality. History has shown that innovation and improved service often emerge from new entrants, but the incumbents, whose profits derive from generation, have little incentive to drive meaningful improvements in retail.

A Call for Government Intervention

Electric Kiwi firmly believes that it’s time for the government to take bold action. One approach would involve divesting some of the generation assets from the ‘big four,’ leveraging the government’s 51% ownership stake in Genesis, Mercury, and Meridian. This ownership stake, originally intended to protect New Zealand consumers, has been used more like a stealth tax. It’s time to put it to better use for the benefit of all Kiwis.

Another option is for the gentailers to divest their retail businesses, forcing them to stand on their own without subsidies from their wholesale operations. Similar actions have been taken in the past, resulting in more competitive markets, as seen in the telecommunications sector.

We have lodged a complaint with the Commerce Commission under Section 36 of the Commerce Act. The Government made changes to section 36 of the Commerce Act earlier this year that make it more straightforward to identify a case for misuse of market power. We’re using this new provision because the Electricity Authority has failed to act decisively on any of these problems, but we have some confidence that the Commerce Commission will take the issue seriously.

At Electric Kiwi we are not afraid of competition, and we know a level playing field is exactly what the big four gentailers are desperate to avoid. We will keep fighting this, and in the meantime working on how we make it better for you and for our country. Government intervention, through measures like breaking up the gentailers, is necessary to restore competition, lower prices, and promote innovation in the market. It’s time to prioritise the needs of Kiwi households over corporate profits.

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The post This is how we can lower your power bill, by saving on water heating appeared first on Kiwiland Times.

Mastering Hour of Power

The more power you move off-peak, the more money you could save and the better it is for the
environment.

Anne describes her energy usage habits as ‘just the right thing to do’. The former science teacher told us: “I wanted to charge the car overnight because it’s better for the country – plus, it’s good money-wise too. I make the free hour of off-peak power 3am most of time because no one else is using energy then. When you do things on timers, you can do it anyway you like. It just makes sense.

“I normally score above 92% off-peak. My goal is zero kWh between 7am and 11pm but I haven’t hit that yet. Possibly under 1kWh is achievable. I enjoy playing the game.”

Anne has always been conscious of her environmental impact and wants to do her bit to limit the effects of climate change. But the devastation of the Christchurch earthquake has also influenced the investments she’s made in making her home as energy efficient as possible.

Saving with solar-powered hot water

“My first reason for wanting solar was the security of supply. The second reason was climate change, and third reason was saving money,” she says. “Solar makes me happy, though it’s not for everyone. If you use most of your electricity during the day, it makes sense to generate it if you can. But I know it can take quite a few years until it’s paid for itself.”

Anne attributes much of her money-saving success to her solar-powered hot water heating, which is why she encourages others to do what they can to reduce these costs.

“On the main roof is a solar hot water panel, together with a microprocessor controlling the hot water cylinder. As soon as I figured out how to do it, I set the water cylinder to only heat the water overnight (from 3am) if the sun did not do the job during the day. We shower and wash clothes in the morning, so on the rare occasions where the water isn’t piping hot at 9pm, it doesn’t matter,” she said.

Read more: How to use your battery to save with MoveMaster

Keeping warm for less

While her summer bills are low, winters in Christchurch inevitably lead to higher costs, despite Anne’s best efforts to utilise the solar and battery that’s been fully charged with cheap overnight electricity rates. But the heat pump is sometimes used at peak times. That’s why Anne encourages everyone to insulate their homes as well as they can –including double-glazed windows and draft stoppers – and ensure internals doors are closed so that you can focus on heating the most-used areas of the house.

“I set my Hour of Power to match my hot water setting, then I set the house battery to charge for that hour, and have a timer for my car so it charges then, too. Charging my car for an hour per day covers about 70% of my needs. The rest I mostly get from free chargers in select car parks like my local supermarket. It seems to me that paying to charge EVs is now optional… at least for someone driving 50km per week.”

Use the tools at your fingertips

“Do as much as you can to insulate your home because every little helps in both quality of life and reducing energy costs,” Anne says.

“This goes for people renting their homes, too. You could easily hook linings to curtains to help keep the cold
out.”

Anne understands that her circumstances are unique and that not everyone is able to invest in their homes the same way she has been able to. She wants experts – and energy retailers – to help inform customers more about their power usage habits and where efficiencies are possible. She loves to use the EK app and other resources to monitor her usage and make adjustments where she can.

“I think the most valuable tool I have is the app on my phone that tells me, every five minutes, the power generated, power to and from the battery, and power to or from the grid. It shows me what appliances use lots of power and which don’t. For example, I know my vacuum cleaner uses lots of power, so I try to use it on sunny days,” Anne says.

“People need more information about their personal energy usage, people need to know what uses a lot of energy and what doesn’t – everyone who pays for electricity needs to understand how their water is heated and when. Knowledge is power. It can help people alter their behaviour.”

EK customers have access to a range of helpful insights through our easy-to-use mobile app. You can monitor your energy usage over time, nominate and change your Hour of Power to suit your needs, and manage your account and billing information. Here’s our guide to mastering the Hour of Power.

Read more: How much power are your home appliances using?

We’re always working on new, innovative ways to help customers shift their energy usage off-peak, reduce their bills and support the energy transition. We’re especially proud of the trial we have been undertaking to control the times when hot water cylinders are powered to help households cut back on costs. Learn more about that trial here.

If you have an awesome story about using our MoveMaster plan – or any other great tips to become more energy-efficient – we’d love to hear from you on our Facebook page.

The post ‘Knowledge is power’: How this EK customer is saving with MoveMaster appeared first on Kiwiland Times.