Payless wins over customers

A full moon rises over transmission pylons at Three Mile Hill, near Dunedin. Photo by Stephen Jaquiery.
A full moon rises over transmission pylons at Three Mile Hill, near Dunedin. Photo by Stephen Jaquiery.
Start-up Otago electricity retailer Payless Energy is on the cusp of signing up its 200th customer, having extended services beyond Dunedin into Central Otago during December.

With just under 200 customers, as of this week, the Mierzejewski family-owned company is a minnow in the ocean of electricity retailers, but is at present sticking to ''word-of-mouth'' referrals to keep its growth plans on target.

Since its launch in July last year, with just 13 customers, Payless Energy has been rated as the cheapest of nine retailers in the Dunedin area.

Its all-inclusive overall electricity and fixed line costs for residential users is 19.8c per kilowatt hour, Payless finance director Radek Mierzejewski said yesterday.

Payless' competitors' rates, as at November, started at 21.94c with Nova Energy and rose to the highest at 26.36c with TrustPower, according to recent comparison data of the Electricity Authority, released by the Ministry of Business, Innovation and Employment.

Payless uses Dunedin City Council-owned Delta for meter reading, in tandem with transmission company Aurora, and with standing agreements already in place with Aurora was able to move into Central Otago as a ''natural expansion'', he said.

Although modest in numbers, Mr Mierzejewski said Payless now had customers in Alexandra, Cromwell, Queenstown, Frankton, Clyde Alexandra and Wanaka.

Payless, with its four person all-family staff, buys electricity on the daily spot market and makes its savings in keeping overhead costs to a minimum.

Staff are on ''quarter salaries'' during the start-up period and the company has no marketing campaign under way.

''Given the volatility in the spot market ... we have to cover the [spot market] fluctuations in the business, which is why we are being cautious,'' Mr Mierzejewski said about the company signing up 20 to 30 customers a month, and not targeting more at this stage.

He wanted Payless to be sustainable, in that the risk lay in Payless at times having to buy spot market electricity at $1 per kilowatt-hour, while the electricity to its customers was charged at 16c per hour.

In December the customer base grew by 13 to 147, then in January rose by another 38.

''It's really starting to pick up and we are getting a lot of referrals, by word of mouth,'' Mr Mierzejewski said.

He said the ''band'' of kilowatt charges by the big retailers was very similar, given they ''spent millions'' on advertising campaigns, which was a cost later passed on to customers, as were big head office costs and large staff numbers.

''By July [launch anniversary] we'd like to be recognised as the local supplier, and be seeing our client base growing,'' Mr Mierzejewski said.

- simon.hartley@odt.co.nz

 

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