Contact's consumer backlash

Auckland-based Mercury Energy this week entered the Dunedin electricity market, securing its first customer three minutes after its marketing started.

In contrast, rival Contact Energy is shedding customers throughout the country as fall-out continues from its decision to raise electricity prices 10%-15% for South Islanders and in reaction to its board proposing a doubling of the pool of money for its directors.

Electricity retailers yesterday reported a flood of inquiries during the past two days from Contact customers considering switching suppliers.

Many were from the South Island.

Meridian Energy reported a 200% increase in calls to its call centre on Thursday, a pace which continued yesterday.

TrustPower had 800 callers on Thursday inquiring about changing, equivalent to the normal volume of callers it received in a month.

A Genesis Energy spokesman said inquiries through its call centre on Thursday and Friday were nearly 50% higher than forecast.

Mercury Energy began its marketing push into Dunedin at 3.30pm on Thursday and confirmed its first customer in the city at 3.33pm.

Mercury retail manager Richard De Luca said an average Dunedin household would pay $200 less a year for its electricity than it would from Contact.

In the past two days, Mercury had dealt with "hundreds of customers" shifting from Contact. Mercury operates throughout the country but mostly in the North Island.

Contact communication manager Jonathan Hill said the company welcomed the arrival of Mercury to Dunedin.

"We have not noticed a significant number of customers switching, but we are aware some customers have called us and announced they were intending to switch."

Contact has 650,000 electricity, gas and lpg customers and generates 28% of the nation's electricity.

A spokeswoman for Meridian said the majority of callers were Contact clients who told staff they were angry about the price hike and the board's seeking to increase the pool from which directors' fees were paid from $770,000 to $1.5 million.

TrustPower community relations manager Graeme Purches said callers to his company were raising those same concerns and the company was launching a marketing campaign in Dunedin.

Contact's majority shareholders approved the director fee pool increase on Thursday, but the board backed down on the proposal to increase directors' fees.

Contact says Southern consumers face a further four to five years of high electricity prices, until transmission bottlenecks are addressed or more generation is built in the South Island.

Energy Minister David Parker and Electricity Commission chairman David Caygill rejected those claims.

Mr Parker said the South Island was an overall exporter of electricity, but management of the South Island hydro lakes before this year's dry winter meant levels were low and electricity had to be sent south.

He was not accusing generators of mismanaging lakes, but said they knew that if the lakes became too low they could draw electricity from the North Island.

"This year they got it wrong, so why should the South Island pay?"Mr Caygill said transmission capacity was only an issue when electricity was sent from north to south - about 10% of the time.


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