Electricity Authority extends 'What's My Number' campaign to SMEs

By Amanda Morrall

Small and medium size business owners are being encouraged to become more active consumers in the power market by taking advantage of a new self-guided brokering service.

The What's My Number business tool, unveiled on Tuesday by the Electricity Authority, allows competing power companies to bid on the supply needs for SMEs through an online tendering process.

Carl Hansen, chief executive of the Electricity Authority, said while many business owners were under the impression savings through switching power companies would be marginal, the marketplace was more competitive than they realised.

For example, one business operator who participated in a trial of the new facility prior to its public launch, found a NZ$28,000 difference between the highest and lowest bidder.

Hansen said although price was not always the bottom line when it came to power suppliers, (service and reliability were other considerations), having greater transparency on the price differential between power suppliers was a huge benefit.

"I expect it'll add more competitive pressure on the retailers. They'll know it'll be a lot easier for the SMEs to approach them and get comparative offers. So just like the residential campaign, this certainly puts a great deal more pressure into the market and I think the retailers will respond accordingly."

SMEs who participated in the trial found an average spread of 17% between the highest and lowest bidder.

Widespread benefit

Hansen said the potential savings were significant.

"Small to medium sized businesses contribute 39.8% of the country's total output so are an important part of the New Zealand economy, making sure they are not unnecessarily overspending on absolute necessities like power, benefits everybody.''

The Electricity Authority's power switching campaign aimed at householders have been touted a success based on average annual savings of between $150 and $165. (See Amanda Morrall story here for more details).

When the Electricity Authority kicked off its household campaign last year, it anticipated 50,000 unique visitors to its "What's my number?" website after three months. It reached those numbers within three days.

Hansen said while the Authority does not have any specific targets in mind for the uptake of its latest tool, he believed it would be well received because of its simplicity.

"Think of it like an electronic broker. There's a platform, you submit your details for your business, it goes through to SwitchMe who do checks and that gets released to the retailers."

Retailers bidding on the business are required to remit an offer within 10 days.

Despite increased competition among retailers, power prices have continued to climb ostensibly because of the line costs, still largely a monopolistic business.

Regardless, Hansen believes greater consumer activism by this segment of the market will have a positive overall effect.

"By putting more competitive pressure on the elements of the system where you do have a choice, the retailing and the generation, it means they have to be clear about the purpose of their investments in that there's pay off from it. Because if they get themselves into a position where they are not so cost competitive, then they are going to struggle in a competitive market because in a competitive market a lot of it is about delivering value that comes from innovation. But also delivering value from being lower cost, and therefore lower price then your competitors."

Empowering consumers to exercise their freedom of choice will effectively help to reform the market, he reasoned.

"It'll ripple right through (the industry) so we should see value gains not just in terms of scrutiny of their investment decisions but also in terms of the innovations that they make. We know we are entering a period over the next two to five years where there's going to be quite a bit of innovation association with smart metres and the way different retailers are going to offer enhanced value to consumers, either through facilitated services that help to control their energy use more accurately or through better tariff plans.

So right now is a great time for that competitive discipline because it drives value for consumers all the way through."

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