A power start-up that sells electricity at wholesale prices has told customers to find new suppliers because prices are too high.
A power start-up has told its 250 customers to switch to an electricity provider offering fixed price contracts. Photo: 123RF
Nelson-based Powerdirect.co.nz, which started in June, has told its 250 customers to switch to an electricity provider offering fixed price contracts because the industry has been hit by a "once in a lifetime" supply problem.
Chief executive Lester Binns said Powerdirect was not in financial trouble, but it knew customers would keep being hurt by high prices to Christmas and possibly after.
"Powerdirect itself is still alive, we're still operating. But, we wanted people having good experiences and they were not going to have experiences with their power bills if they stuck with us through this event," he said.
Spot prices have hit as high as $1000 a megawatt hour over the past month because low hydro-lakes level and reduced gas supplies have forced the running of the expensive coal-powered Huntly station.
Electricity Authority figures show wholesale prices averaged $300 per megawatt hour in October, three times the normal for this time of year and the highest in seven years.
The authority has called the situation unusual, and said conditions would continue into November, although recent rains have helped to stabilise lake levels.
Mr Binns said it would review its operations when supply was corrected, but he did fear such issues would occur again, making the spot-pricing business unsustainable.
Another wholesale electricity retailer, Flick Electric, majority owned by Z Energy, is also being pressured and it's been asking its customers if they want to switch to its fixed price contracts.
Flick Electric chief executive Steve O'Connor said in October that he told regulators about concerns for wholesale asking prices by generators in current conditions.
"Put simply, our Freestyle customers are paying the generators - Genesis, Mercury, Meridian, Contact and TrustPower - at a level that does not correlate with the costs of generating and supplying electricity. It is opportunism driven by a lack of competition," he said.
"We are elevating this issue with the regulators."