Supplier switching at four-year low as power prices stay up

Lake Karapiro dam. North Island inflows have sat below average.

Switching in the retail electricity market is at a four-year low amid sustained high wholesale prices.

About 30,340 customers changed supplier last month, 13 per cent less than a year earlier and the lowest February total since 2015. Switching in January was just 29,350, also a four-year low.

Switching is usually lowest in January and peaks in the winter months. It tends to jump sharply in February and March as retailers use autumn to start recruiting campaigns.

Contact Energy, which is offering a free month of power on a 12-month fixed deal, was the best-performing brand last month. It added more than 1200 customers in February — its biggest gain in more than seven years. Nova Energy, which is promoting its new broadband service heavily, was also among the few established generator-retailers to post gains.

But gains by newer independent players have been relatively flat since December amid prolonged high wholesale prices.

Electric Kiwi chief executive Luke Blincoe said now is not the time for independent firms to be trying to add to their hedge positions.

His firm, which is almost fully hedged a year out, was the second-biggest gainer last month and now supplies almost 36,000 customers. It added more than 1100 customers in February, its ninth straight month of 1000-plus customer gains.

"We hedge to our forecasts and we had pretty ambitious targets," Blinco said. "We've got a pretty good view 18 months out ... of what we can do."

Wholesale power prices jumped in October and have remained elevated the past three months amid declining North Island hydro storage, constrained gas supplies due to maintenance work at the Pohokura field, and strong irrigation demand in the South Island.

Prices jumped last week as the onset of cold, still weather reduced wind production at the same time as maintenance work at a handful of plants reduced geothermal and hydro production.

Power cost $234.53 a megawatt-hour on Friday, a one-month high and four times that of a year earlier, according to the Electricity Authority's national price index. June-quarter Otahuhu futures jumped to $245/MWh last week, while the September-quarter contract climbed to $220/MWh.

Investors and industry are concerned the completion of work at Pohokura next month may not leave sufficient time to restore gas supplies for normal winter generation. Contact has cut production from its gas-fired plants in Taranaki and last week indicated it drew down its stored gas reserves at Ahuroa to about 5.2 petajoules at the end of February.

Rain can fill hydro lakes quickly, but national storage was about 21 per cent below average last week, according to NZX Energy data.

North Island inflows have been below average since late September.