A brand-new power company is warning its customers to jump ship or receive power bills up to five times their normal amount.
Power Direct, a Nelson-based company that was launched in June by parent company Mytax.co.nz, provides wholesale pricing to customers, charging them for what they use, when they use it.
Power Direct’s mission was to save Kiwis money on their power. However, just months after their launch, they are scrambling to “reduce their customer base to zero” after the ‘spot’ price of power went through the roof.
Operations manager Jared Lock says the issue that the energy sector is facing is something they have never seen before.
He says a large unplanned gas outage at Pohokura – an offshore gas production facility – coupled with lower than average lake levels have meant that the supply of energy in New Zealand has been significantly reduced. This has led to a dramatic increase in the spot price of power.
An email sent out to customers told them that remaining with Power Direct during this time was no longer an option.
“At this stage, we are advising all our customers to move to a fixed priced retailer.”
Pohokura isn’t expected to be up and running again until late November at the earliest, which means Power Direct’s wholesale pricing will remain much higher than companies that offer fixed-pricing.
“As a wholesale power retailer, the spot price of power is passed through to the customer at the current price when the power is consumed,” Jared says.
“While we generally see price spikes that last a couple of hours/days, the above market conditions have meant that high prices could be in force for weeks/months.”
He says the spot price has been anywhere between two and five times the normal rate since the outage and the flow-on effect to consumers’ bills is huge.
“We didn’t think that it was fair to not provide our customers with the full information and just expect them to pay these huge costs moving forward.”
It was not clear whether the company would just be put into hibernation until power prices return or be shutdown.