Customer Swap Strengthens Retail Competition
CUSTOMER SWAP STRENGTHENS RETAIL COMPETITION
Electricity retailer/generator TrustPower and Mighty River Power, owner of the Mercury Energy and First Electric retail electricity brands, have agreed to exchange about eight percent of their customers in a move both companies say will enhance their competitiveness and benefit consumers.
Under the agreement, about 20,000 First Electric customers in Christchurch and Wellington will become TrustPower customers, and around 20,000 TrustPower customers in the Northland, Auckland and Thames Valley areas will move to Mercury Energy.
The exchange will be completed during March with customers receiving their first bills from their new supplier in March or April, depending upon their meter reading cycle.
TrustPower and Mighty River Power say the customer exchange will create stronger competition in the affected regions.
"You need scale and market share to be an effective competitor in the new retail electricity environment," says TrustPower Chief Executive Keith Tempest.
"I believe this exchange will assist both TrustPower and Mercury Energy to compete more effectively in markets where we are not the dominant incumbent retailer. That has to be good for consumers."
Mighty River Power Chief Executive Doug Heffernan says the swap means Mighty River Power's First Electric brand and TrustPower will be effectively withdrawing mass-market services from some areas.
"Mighty River Power's Mercury brand and TrustPower will gain customers in areas where they currently have a comparatively small market share.
"Improved economies of scale will allow both to compete more strongly against the dominant retailer, and lead to the creation of a stronger second player in these markets, and greater competition," says Dr Heffernan.
Dr Heffernan says affected TrustPower customers in the upper North Island are being transferred to Mercury Energy as this is a full service brand, comparable with their existing TrustPower service.
"Those customers are used to monthly meter readings and the other services associated with a full service provider. It's entirely appropriate they join a premium electricity brand."
Dr Heffernan says the exchange with TrustPower is Mercury Energy's first move out of the Auckland region for residential and small commercial customers and signals Mercury Energy's intention to become a major competitor in the upper North Island.
TrustPower has already competitively gained more than 28,000 customers in the Wellington and Christchurch markets through superior service provision, says Mr Tempest, and this move further cements TrustPower's position in those areas. Mr Tempest says First Electric customers transferred to TrustPower next month will immediately enjoy the full retail service provided by TrustPower without any additional cost for their electricity.
"We believe there will be ongoing benefits to these customers from joining our company," he says.
TrustPower and Mighty River Power will continue to service customers in the affected regions who are on fixed term commercial or national contracts.