Power Compare's chief executive believes his company could likely "deliver more bang for the taxpayer buck" than Powerswitch. Photo: 123rf
Power Compare, a power comparison website, has criticised the Electricity Authority for not doing enough to lower energy costs for New Zealand consumers.
The Electricity Authority has extended its contract with Consumer NZ to continue supporting the electricity price comparison website Powerswitch.
The Powerswitch website aims to help people find better power deals.
The two-year extension of its contract commenced on 1 July 2023 and includes $2.8 million in funding.
Parent company NZ Compare said Powerswitch's contract being extended for two years without an open competitive process raised questions about transparency and equal opportunities for all suppliers, and demonstrated a complete disregard to getting the best result for the New Zealand public.
NZ Compare chief exectuive and its subsidiary Power Compare, Gavin Male, said "we're a bit unhappy about the fact that we never got the opportunity to pitch what powercompare.co.nz could do".
"We think that we could probably deliver more bang for the taxpayer buck."
The Electricity Authority was responsible for generating competition amongst electricity retailers within New Zealand, but Powerswitch only listed 17 out of more than 30 electricity retailers, leaving out many options for consumers, Male said.
That was due to the website charging fees to the providers to get them on board, making some retailers hesitant to participate, he said.
Power Compare, in contrast, listed more retailers but still charged fees for those it referred, he said.
He believed if it had the Electricity Authority's funding, it would also be able to scrap provider fees.
NZ Compare also said data analysis from the Electricity Authority showed that Powerswitch's switching rate had decreased to just 6 percent since its engagement by the government.
Male said with switching rates so low "Kiwi consumers were being let down by the power switch websites, the electricity authority, and basically paying too much money for their energy."
"Energy hardship is a real issue in Aotearoa, and in the middle of winter when people need warm, dry homes the most, they're being let down by a system that can't show them what the cheapest power provider is. What's worse, they're paying for the privilege with their own taxpayer dollars," he said.
He encouraged consumers to switch power providers regularly.
The best way to increase competition and drive down prices was by having consumers comparing prices regularly and changing providers, he said.
Power Compare wanted to ensure sites being funded by the Electricity Authority were delivering "the best-in-class service", he said.
Male was not convinced extending Powerswitch's contract instead of putting it to open market achieved that.
Consumer NZ defends Powerswitch
Consumer NZ chief executive Jon Duffy said the retailer plans on Powerswitch covered 98.7 percent of the market.
"We believe Powerswitch is the best place for consumers to get a free, one stop, assessment of whether there are better deals out there that suit their needs," Duffy said.
Powerswitch was more comprehensive than other comparison sites, with around 3500 electricity and gas pricing plans in their database, he said.
"The very existence of the service should encourage all retailers to keep their prices sharp, so they don't lose customers to better offers. Competition in the electricity sector has been heating up over the past year," he said.
Duffy said the website was not-for-profit and provider fees were essential to keeping it running.
"The Electricity Authority, via a levy on electricity retailers, funds about 75 percent of the cost of Powerswitch. The amount each retailer pays under the levy is proportional to the number of customers it has. This means the retailers with more customers pay more towards running Powerswitch," he said.
Duffy said as a not-for-profit Consumer NZ did not have the money to cover the remainder of the cost of running and developing Powerswitch. "The remaining 25 percent is covered by switching fees - when a customer switches to a new provider, the new provider pays a small fee to Powerswitch," he said.
"We feel this is a better way to maintain true independence, rather than running advertising from retailers or requiring retailers to pay to be listed at all. We know the Electricity Authority values the independence we are able to maintain," Duffy said.
Consumer NZ said one retailer recently chose to delist from Powerswitch because it was concerned about taking on new customers due to unrelated market issues.
Electricity Authority to improve website under new contract
A spokesperson from the Electricity Authority said it has not run a competitive tender for the contract that Powerswitch currently holds.
The contract was first entered into in 2020 after the Electricity Price Review recommended that Consumer NZ's Powerswitch and the Electricity Authority's What's my Number? price comparison websites be merged to create a new and improved website.
Upon renewal the Electricity Price Review recommended the Electricity Authority contract with Consumer NZ to maintain, promote and progressively develop the website, the spokesperson said.
The contract with Consumer NZ also provided for the right of renewal subject to the agreement of both parties.
"An open procurement process for a new contract will be undertaken prior to the expiration of the extended contract held by Consumer NZ on 30 June 2025," the spokesperson said.