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“Win-backs” no longer a retailer option

Words by Richard Rennie 


Energy consumers have the opportunity for more choice of energy companies, thanks to the recent decision by the Electricity Authority to ban the retailer based win-backs for 180 days after a customer has decided to switch to another retailer.  

But the opportunity to negotiate a better “first off” deal when negotiating with a large retailer for the first time still remains the best pathway for Ruralco members seeking an energy agreement that is well priced and realistic. 

The win-back method came into play when a power customer opted to leave their supplying retailer, but were then enticed back to that supplier when they were offered a better deal.  

The number of switcher retailers has grown in recent years after a change in regulations by the Electricity Authority back in 2015 required retailers to provide general pricing plans to any consumer requesting them.  

Until then it was only possible to assess prices through the Consumer NZ funded Powerswitch process.  

The move by the Electricity Authority on win backs has come about thanks to the authority carrying out an electricity price review last year.    

This was the same review that recommended an ending to prompt payment discounts, something the government has undertaken to raise with the sector with the minister writing to electricity retailers telling them she expects them to make discounts available to all customers.  

Meridian Energy followed through on this and handed $5 million back to customers. The government has told the industry that if other companies do not follow suit, it will regulate to ensure they are forced to.  

The review estimated customers could save up to $45 million a year if all retailers followed Meridian’s lead. 

The entire review process has been generated by concern over the rising cost of electricity in New Zealand over the past two decades. Residential prices have increased by almost half since 2000, and 80% over the past 28 years after inflation has been allowed for.  

This is a rate higher than other OECD countries and comes as commercial prices have fallen by 24% and industrial prices have increased by 18%. 

Wholesale electricity prices in New Zealand took a significant jump in late 2018 after a dry spell down south and gas supply issues to gas fired stations, and those prices have been slow to level out.  

This has been in part due to hydro storage alerts in early 2019, dry North Island hydro conditions through the first half of 2019 continuing through to this summer, and increased wholesale spot gas prices all year through 2019. 

Those daily gas spot prices are now sitting over double what they were back in early 2018.  

Industry analysts anticipate that gas supplies will remain tight leading to continued higher longer term wholesale electricity prices, up 30-40% on their past long term average. 

Meantime gaps have been growing between the highest and lowest retailers’ prices.  

Despite having 35 energy retailers, the “big five” consisting of Genesis, Contact, Mercury, Meridian and Trustpower, claim over 90% of that, meaning they have the critical mass to offer incentives to customers to remain with them. 

Tracey Gordon, Ruralco Energy Sales Manager says given the horsepower the big companies have behind them, it makes sense to be up front in negotiations with them about pricing expectations early on in negotiations on what constitutes a workable, realistic power deal with them. 

Survey results last year from Canstar Blue showed that of 4200 respondents, only 43% actually compared electricity prices. This was despite a majority of people expressing concern about their power bill cost every month.  

The action by the Electricity Authority has effectively banned the win-back offerings for 180 days after the customer has made a switch.  

Tracey says this makes it even more important to work early on to set the best price and contract conditions with a retailer, something the Ruralco Energy team have the skills and contacts to help members negotiate on their behalf. 

The new win-back rule comes into effect on March 31 and the Electricity Authority will regularly monitor the market for compliance and competitive effects including pricing and acquisition costs. It will review the impact of the decision in three years’ time. 

Tracey urges Ruralco members to come to her and her team before deciding to quit their electricity retailer, given the inability to return for at least 180 days under the new conditions. 

“We can put an independent eye over what is being offered, and make sure they are really getting the best deal. There are many companies and sales staff out there putting offers out that re not correct. We don’t want our members to be stuck with a higher price than they need to.” 

Tracey says there are still opportunities to get a good deal from a large retailer. 

Contact Ruralco Energy on 0800 787 256 now for trusted, independent energy advice and to ensure you are getting the best deal. 

About the Author


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