Article - The Power Club

7 July 1999

"The Club Powers On"

Since The Power Club launch a week ago, Federated Farmers has been inundated with members' responses. It appears that the Club concept has significant appeal and it is anticipated that there will be a further surge of subscribers over the next two weeks.

The minimum number of members required for the Club to function effectively is 2000, and even that requires significant data processing, so farmers are urged to get their applications in as soon as possible. Several retail electricity suppliers have already expressed their interest in supplying Club members and it is anticipated that significant savings will be available. Deals currently in the market imply saving up to 15% on energy purchases, and that forms the baseline target for the Club.

Examples of savings to be made through the Power Club are as follows, an annual electricity bill of $3,000 per year will give savings of approximately $225 while an $8,000 account would give a saving of approximately $600. It is also intended that the Power Club will tackle line charges, so ultimately the expected savings could double.

This is the first time farmers have been able to access independent expert advice at a low cost and the Club sees value in being able to compare the variety of offers currently targeted at farmers.

Already a number of other organisations have indicated interest in the Club concept and some individuals are seeking to establish regional buying groups. Retailers are also targeting specific sections of the market in an attempt to secure long-term contracts, thus locking in prices.

Potential members should note that the Power Club has the triple advantage of size, national coverage and high level independent expertise. As such, the Club is confident it will deliver a better deal to its members than any of the other options currently in the market.

It is essential that farmers are fully informed as to the implications of any offer before signing a supply contract and the Club provides that service within its initial joining fee. It is anticipated that the joining fee will be recovered from savings in the first bill a member receives.

Where retailers' offers include load management incentives, the Club can help farmers to operate within the limits set. The Club enhances the operation of all retailers rather than competing against them. There is no intention that the Club should buy and sell electricity - it is simply a broker looking to deliver the best deal to members.

The Club intends to encourage retailers to provide farm type and regionally specific products in recognition of the variation between the needs of Club members. This applies in particular to irrigators and dairy farmers who have a totally different load profile to most consumers. There is also potential for regional benefits, where smaller generators can offer lower cost delivered energy as a result of avoiding transmission charges.

To be successful, retailers will need to have innovative products and be totally transparent in how they charge. Dealing cost-effectively with multiple meters will be a significant challenge for retailers and could well be the difference between success and failure as an acceptable Club supplier.

For more information and an application form, contact Glen Baron on 0800 FARMING (0800 327-646).

Glen Baron Marketing Manager Federated Farmers of NZ Inc

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