TrustPower retreats to cosy comforts of home

By CHRIS DANIELS

Retail competition in the electricity business has suffered another blow, with the withdrawal of TrustPower from the Christchurch and Wellington residential markets.

Describing the move as a "managed withdrawal", the Tauranga-based company is suggesting its 32,000 customers sign up with a former rival, Contact Energy's Empower brand.

TrustPower deputy chairman Bruce Harker said TrustPower had not offered up the customers for sale to another retailer, preferring them to have a choice of supplier.

Contact Energy is the only one of the big generator-retailers that is not owned by the Government.

Despite any power retailer being allowed to compete for customers across New Zealand, the levels of retail competition have declined.

Business customers are sought after, but the big generator-retailers have settled into geographical areas where they are dominant, preferring not to aggressively compete elsewhere. They also prefer to have customers close by the sources of generation to save on transmission charges.

Meridian, a state-owned enterprise, is the dominant retailer in the Christchurch market, while another SOE, Genesis, dominates in Wellington.

Harker said TrustPower would focus on markets where it had a strong "retail brand presence".

The way other power retailers were behaving also had played a part in the withdrawal, said Harker.

"The realities of these markets is that some retailers continue to sell at unsustainably low prices.

"This makes it difficult for TrustPower to viably retail in these areas, despite offering class-leading retail service."

He said the plan to stop retailing in these areas was a long-term one, and not prompted by the current power crisis.

"The current high wholesale prices have coincided with TrustPower refocusing its retailing business.

"The strategic driver is the long-term availability of wholesale supply that enables TrustPower to compete with the retail prices set by other vertically integrated companies."

Any TrustPower residential customer wanting to go to Empower will be given $50 off their second power bill.

They can also choose to go to any other power retailer that will have them, or simply stay with TrustPower.