Campaign leads to increased supplier switching in New Zealand


Wellington, New Zealand — (METERING.COM) — December 12, 2011 – Following the launch of the “What’s my number?” campaign in New Zealand in May customer supplier switching up to the end of September increased by 37 percent over the same period last year, according to the Electricity Authority.

In the period from June to September, 162,965 consumers switched retail provider, and there was a 0.3 percent decline in electricity prices – largely due to increases in some prompt payment discounts. For comparison the Statistics New Zealand consumer price index shows retail prices were up 4.6 percent on an annual basis in the year to September.

Initially it was estimated that consumers could save on average NZ$100 (US$77) per year but experience has shown that the average annual saving is higher at around NZ$150 (US$116).

In its commentary the Electricity Authority noted that the increased switching coincided with a period of declining market share for some major retailers and a flurry of discounting in apparent attempts to recapture or maintain market share. Some of the biggest discounts came from the companies with the largest declines in market share.

However, retail switching is not valuable in itself and can impose transaction costs that lead to higher prices. As such the Authority said its focus is therefore on increasing consumer willingness to switch when savings are available, rather than increasing actual switching rates. A high level of consumer willingness to switch puts pressure on tariff offerings, encourages innovation, and creates opportunities for new entrants even when switching rates are low.

Further analysis of the economic benefits of the campaign will be undertaken in 2012.