We have something important to say about Powerswitch.
The energy comparison website, 75% funded by the Electricity Authority (via a levy on your bills) and run by Consumer NZ, is currently not listing Electric Kiwi’s plans. We think that’s a major problem.
The people behind the website, that’s supposed to be a beacon of information and transparency in the energy market, have decided it’s OK to remove retailers who refuse to pay them based on their funding model which punishes small independent retailers for being price-competitive while the big gentailers get away with minimal contribution.
We think Consumer NZ have lost their way. But what’s important right now is that Kiwis understand why they won’t be seeing us on Powerswitch – and therefore won’t be seeing some of the best deals in the market.
We are calling on Consumer NZ to do the right thing, and return all prices to the Powerswitch site immediately.
Here’s the issue
- Powerswitch receives 75% of its funding from the government (via the Electricity Authority) which means it needs to raise the other 25% from elsewhere. To be fair to them, Consumer believe they should be funded 100% by the Electricity Authority, and we agree.
- The issue is how they go about raising money for the percentage of funds that do not come from the EA levy. For the past couple of years, Powerswitch has charged retailers $50 when users follow links from their site and join.
- This might sound fair – but we have objected to this model because it means that the price leading retailers like us – who offer the best deals to consumers – end up providing the vast majority of the funding for the website. We have previously been told by Consumer that the cheapest retailers would at times account for a whopping 60% of their retailer-generated revenue under this model, while the more expensive retailers get away with practically zero contribution. We don’t think this is fair given all retailers have a responsibility to contribute to this essential consumer service.
- While $50 does not sound like much, it means the cheapest deals will need to increase to cover the fee – while the expensive guys get to charge more and avoid the fees. Essentially, a government-funded comparison site – whose stated goal is to increase competition and transparency – is undermining the ability of retailers to offer better prices by hammering them with a levy. Sound like a smart approach?
- We have offered to contribute fairly (as we had done for years), but Consumer has refused our offers, so links to our website have not appeared on Powerswitch for some time but our prices still remained. We were not sure how making things less convenient for consumers fits into Consumer’s brand ethos, but we accepted it.
- Now Powerswitch have made the decision to remove retailers from their website entirely if they don’t agree to their funding model. So, this essential comparison site, run by ‘Consumer – the independent, non-profit organisation dedicated to getting New Zealanders a fairer deal’ has decided not to show consumers all of the options available to them. All we can say is, really?
What makes this even more frustrating – and mind-boggling – is that Consumer previously agreed a funding model with Electric Kiwi that acknowledged that the best-priced retailers having the burden of most of the fees was inappropriate. They have now backed out of that deal.
What do we suggest?
Firstly, we call on Consumer to do the right thing by energy customers, and make sure that all retailers are reflected in their panel as a matter of urgency.
Longer term, the best solution is that Powerswitch is entirely funded by the Electricity Authority (Consumer agree). And that a fair process to decide who runs this important service is conducted and reviewed by an independent body. If this cannot be achieved, then we suggest that Consumer seek fair contributions from the retailers, such as a fee weighted by market share or similar.
At the moment, we are not visible on the site, and that’s a bad thing for consumers (and Consumer NZ). While this mess is being sorted out, we expect Consumer to find a fair solution so that retailers bringing the best prices are not paying the lion’s share, or missing completely.
Unfortunately this isn’t the only problem with Powerswitch
Our concerns with Powerswitch extend to other areas, too. A key one is how they represent energy plans that incentivise behavioral change to support the green transition. We have been arguing with them for months about how our MoveMaster plan is displayed on their site. What they do is base estimates on a standardised, one-size-fits-all approach to time of use energy plans, when we can (and have) provided real-world evidence to show how consumers really use the plan, and benefit from it. Our customers actually see much greater savings than Consumer shows.
This might sound like we’re just salty because our prices are not displayed as favourably as we think they should be – but it’s bigger than that. Innovative energy plans like MoveMaster are designed to encourage households to shift their power usage away from peak times – and this behavior change will mean New Zealand is less reliant on fossil fuel generation. This type of innovation is essential to NZ achieving our decarbonisation goals and great for consumers.
The whole point of these plans is to drive behavior change, but Consumer NZ refuse to see the evidence of the gains that more than 10,000 households on this plan have made as relevant. They confuse sameness with fairness, and by doing this Powerswitch is doing consumers – and the green transition – a major disservice.
They have now reached the point of refusing to even meet with us to discuss this – and we find their attitude pretty disappointing.
What next?
The Powerswitch funding model really needs to change. We are in Consumer’s corner on this one and hope the Electricity Authority will soon see sense and ensure that 100% of the funding needed to maintain the website comes from government. This should ensure Powerswitch can get back to its original purpose of delivering an impartial energy comparison service for consumers. This can’t come a moment too soon because, currently, Consumer NZ’s behaviour appears more in line with a dodgy commercial site selling optics to the highest bidder.
Consumer have told us they are working with the EA with a view to changing their funding model once the current arrangement ends in July 2023. This would mean an end to unfair levys on the best value plans via these switching fees.
For its part, the EA needs to sharpen up on how it spends taxpayers’ money and run a transparent, competitive process to select the best service provider to run the comparison site. The cosy, closed shop arrangement as it stands would be defendable if the outcomes were themselves defendable.
Consumer also need to work on how they accurately display innovative offers in order to support the green energy transition. These offers will soon start coming thick and fast, and customers will be able to save money – and carbon – by understanding them. Consumer NZ first need to understand them if they think they can play a valuable role in helping others.
Maybe they should start by being willing to talk, or listen to, those in the industry that are trying to make it better.
