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Cheap wind and solar allows Powershop to cut tariffs to customers

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Victorian customers of electricity retailer Powershop can expect to pay around $70 less a year for their electricity costs starting this month, after the company announced a price cut it said was “all thanks to renewable energy.”

The upstart retailer, that is owned by New Zealand utility Meridian Energy, said on Thursday the March 1 decrease of around 5 per cent amounted to savings of $70 a year for an average customer.

In a video explaining the price cut, Powershop Australia boss Ed McManus points to the three hydro power stations the company had recently bought, and the long-term power purchase agreements it had signed new wind and solar farms in Victoria and New South Wales.

As we reported, those wind and solar contracts were part of a huge deal Powershop secured in February, after being “stunned” by the low prices offered in the time since it went to market for proposals last year.

As well as helping Powershop to reduce its prices, the deal has meant that Victoria’s biggest solar project, the 200MW Kiamal Solar Farm near Ouyen, can be built by Total Eren, a joint venture that combines the French oil giant and a renewable energy developer.

Powershop will also take the output from the 54MW Salt Creek wind farm, currently under construction near Woorndoo, around 250km west of Melbourne, and part of the output from CWP’s 135MW Crudine Ridge wind farm, to be built south of Mudgee in NSW.

“The price that we get the energy from these new wind and solar farms is cheaper than the energy we can get from the normal wholesale market day to day,” McManus said this week.

“What that means is, we take the benefits of those lower costs and pass that on to our customer in terms of cheaper rates.”

McManus also noted that the two wind farms the company already owned and operated had helped it to manage customers’ risk of exposure to high wholesale prices.

“In future we can do that more effectively and cheaper because we’ll have access to a diverse set of renewable generation; hydro and the new wind and solar.

“So all of that means doing that more effectively, and at lower cost, and we’re passing that on to you our customers, in the form of lower costs.

(Today’s) price drop is around 5 per cent, which means for the average customer it’s about $70 a year, and all of that is thanks to renewable energy.”

As for Powershop customers in other states, McManus said that NSW and Queensland would have have a price change in the middle of the year, that would coincides with when the retailer would start to get energy from Crudine Ridge winds farm.

“So we’ll be taking that into account, of course, at that time,” he said.  

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  • GlennM

    Nooooo a kiwi company offering Aussies a good deal…this must be stopped immediately

    • Joe

      …but it is 100% Aussie RE being sold.

      • Tony Wilson

        Actually, this is not quite true. It’s only so when southern Australia in in the grip of summer northerlies, or freezing winter southerlies, or the prevailing westerly winds. With easterlies, however, it’s not Aussie RE -, it’s second-hand wind recycled from New Zealand.

        Jokes aside, this is excellent news. Very pleased with my new discount. They are a great company to deal with as a power supplier – so much so that I looked them up and bought some shares in the parent company for my super fund.

  • Jon

    And the paradigm starts to shift….

    Cheaper power leads to more customers which leads to better purchasing power, it will take a while but the bigger gentailers will be seeing this as the thin end of the wedge!!

    I’m in Qld, going to compare tonight and shift accounts if they are competitive.

    • Hettie

      Remember that Powershop prices include GST. Most others do not.

      • Spillmill

        And they discount the supply charge which is great for solar or low power users.

  • Rod

    Please come to South Australia. I’ll switch immediately.

  • Denis Cheong

    It’s easy to tout a 5% price drop when you’ve been creeping your prices up by many orders of magnitude more than this over the last couple of years, and obscuring it from your customers by removing per unit prices from your app. Given PowerShop don’t show unit prices any more, who would ever be able to tell whether this has actually flowed through to customers?

    • Chris

      “Many orders of magnitude” – I didn’t realise how cheap power must have been a couple of years ago!

      I must admit I’m not terribly keen on the all in wrapped up price, a la Powershop, but if you want to find out the daily charge and cost per kWh just go to Usage->Your Rates where you will find out these things.

      I’m a Powershop customer and have no other association with them.

      I do find it difficult to justify the existence of a plethora of retailers who seem to spend more money on marketing and sales than on purchasing electricity (an exaggeration, I know, but you get the idea). But Powershop does at least provide a number of imaginative offerings that nobody else does.

      In a few years batteries will become economic for many households, but my advice is to simply add a lot of solar and the margin added by retail will simply become almost irrelevant. Whilst I’m not self sufficient through the 4 gloomier months of winter, it would still be better from an environmental point of view to add more solar than batteries. On the other hand, from a network point of view, batteries will reduce the peak consumption and reduce average wholesale prices that may actually allow retailers offer cheaper rates.

      • Hettie

        Agreed. The lowest output from my 5kW system, installed October 10, was on Monday 10.8 kWh, but it drizzled most of the day. Yesterday, 34.9, today 31.5 but still generating at 7.30 pm. A whole big 19W.
        I have prepurchased out to the middle of June, and still have $85 credit, with more due March 10. Probably around $110.
        Saving for RC AC to replace the gas heater.
        Between eliminating the power bill and the mounting credit, it’s paying a chunk of the green loan too.

    • Hettie

      They do indeed show unit price, in the section of your phone app labelled “your rates”
      If you are a Powershop customer, have a look. If not, call and ask.
      In NSW, taking advantage of the18% discount for buying on line, I pay, all including GST,
      26.21 cents per kWh any time of day.
      Standing charge is $1.39.99 per day.
      FIT is 11.8 cents per kWh.

      Not that I am actually paying anything. I buy from the mounting credit in my account.
      Any credit over $100 will be paid to my bank a/c when I ask for it. Which I soon will.

      • Denis

        That’s exactly what I mean. Retail prices vary greatly depending on your distributor and location but I STRONGLY recommend you look at alternatives as telling powershop where to go I pay less than 20c/kWh inc GST.

        Download your smart meter data from your distributor and upload it to the government run website to compare options. Powershop is one of the most expensive in Victoria there are many many many cheaper options.

        It was not this way four years ago when I originally switched to powershop but it has been for the last two years.

        Nb: when buying a “power pack” they used to show the price per kWh .. now they don’t. That is what I was referring to. That is what prompted me to start looking and then realise how poorly their pricing had become. I had a long debate with them about this before changing but they refused to change – so I changed.

        • Hettie

          I’m in regional NSW. It is competitive here

          • Denis

            Sorry to hear that electricity is so expensive there, I must say I am surprised that is a good deal there, it certainly wouldn’t be here in inner Melbourne.

          • Hettie

            As you will see from my other comments on this thread, I now pay nothing. Solar rules, OK.

          • Daniel Francis

            I agree… also from regional NSW and its competitive here.

  • Neil_Copeland

    So the current retailers in South Australia will continue to rip us off. Buy cheap renewable energy and sell at high prices?

    • MaxG

      Of course… why give profits away to customers? They need to go to shareholders 😀

  • Hugo Armstrong

    How can they cut prices now if many of these windfarms will not be built for another year or two?

  • William

    Is this a PR puff piece paid by Powershop – a company ultimately owned by the Government of New Zealand?

    “The price that we get the energy from these new wind and solar farms is cheaper than the energy we can get from the normal wholesale market day to day,” McManus said this week. “What that means is, we take the benefits of those lower costs and pass that on to our customer in terms of cheaper rates.”

    1 March 2018 – Powershop decreases rates by 5%.
    yet on 1 January 2018 Powershop increased rates by 20%.

    Powershop customers are paying a 15% increase on last years rates.
    (7-8 TIMES greater than the CPI increase or average wage rise – if you can get one.)

    That should be the headline!

    A month ago on I wrote this in response to their previous announcement on reneweconomy on 1st February:

    Powershop customer – “stunned” by high prices
    Ah Powershop!…seems like only ~6 weeks ago I got an email from them announcing price increases for the new year.

    “From 1 January 2018, unfortunately there will be an increase to the price you pay for electricity. We know this isn’t ideal news and it’s not a message we like sending – you
    can find more info about what’s causing this increase and a link to your new prices below.
    Retail electricity rates are increasing mainly due to significant increases in wholesale prices.
    We delayed changing our rates during 2017 despite the increase in wholesale prices which have almost doubled in the last year or so – and we are not passing on this full increase to our customers from 1 January 2018.
    We don’t make the decision to increase prices lightly and we’re always doing what we can to keep prices low and fair.”

    In 2017 my ‘Standard Saver’ rates:
    all day usage 24.56 c/kWh
    daily supply charge 96.75 c/kWh

    after 1Jan18
    all day usage 29.48 c/kWh
    daily supply charge 95.78 c/kWh

    my daily supply charge has dropped by 1c/day…..$3.65/YEAR! – the saving wont even buy me a cup of coffee.
    However my all day usage (per kWh) charge has increased by ~20%
    29.48c – 24.56c = 4.92c/kWh
    4.92/24.56 x 100/1 = 20.03% increase

    10 TIMES greater than the average wage rise (if you can get one) or CPI increase.
    If I remember to regularly logon I can see the Online Saver rates:
    2017: 19.77c/kWh
    2018: 23.73c/kWh
    It’s still a 20% increase in the cost of electricity!

    My data averaged over the past year says:
    You’re currently using about $1.96 per day
    You’re currently using about 2.8 kWh per day

    I’m paying 70c/kWh for electricity in urban Melbourne, and I thought I was
    getting a good deal with Powershop until the egregious rise last month.

    It’s way, way, way, more than inflation adjusted old SECV rates – rates that covered employing and training hundreds of apprentices, building and maintaining a broad based electrical, mechanical, civil, power and systems engineering capability, and covered sending a very fat cheque to the government each year that offset the cost of my other essential government services.

    Not so now.
    The country is flooded with multi nationals developing and owning large scale wind and solar energy generators producing income streams that will cleverly bypass the clutches of the ATO and be diverted straight to a tax haven offshore before hitting the consolidated revenue accounts of a foreign country.
    A cash vacuum model similar to the existing Singapore/Hong Kong/Chinese Government ownership and dominant control of our generation, distribution networks and retail service businesses in both gas and electricity markets in Australia.

    Powershop is owned by Meridian Energy which is 51% owned by the New Zealand Government.

    I’m a pensioner in a rental otherwise I would have adopted solar panels and
    batteries years ago, but I would like to know if there are any green
    energy service providers with rates (~60c/kWh total unit cost) better
    than Powershop?

    In the meantime I’m off down to the air conditioned library to watch You-tube clips of clever people making cheap home made 10-15 kWh power walls out of used laptop batteries.
    While they’re loading I might type Total Oil, corruption, human rights abuses and massive environmental damage into Google and see what happens. Do the French Government controlled Total Oil still own Melbourne based ‘green’ darling Diamond Energy?

    • William, all Australians pay an outrageous price for grid power, and what you are paying is doubly outrageous. Tragically, low electricity users like you are being screwed by the electric companies. we first wrote a few years ago about the outrageous increases in fixed charges, which began in Qld. I am in northern nsw and use around the same from the grid as you per day, but with a fixed network charge of 1.65/day, i’m actually paying around $1.20/kwh. But most of my power comes from rooftop solar and a small battery. It won’t take much for me to go total off grid. I’d shop around, but not sure what options there are for low usage households.

    • neroden

      Have you talked to your landlord about getting solar power? It might make sense for both of you. If you’ve got an individual landlord (rather than some giant corporation) they might be willing to seriously consider it if you put together some sort of financing plan where you two split the benefits. It’s a long shot, but it’s worth considering…

      • Denis

        Yes William it is a puff piece, full of smoke and mirrors, and yes PowerShop is absolutely not competitive – at least here in Victoria.

        I strongly recommend you download your smart meter data, submit it to the completely impartial government website switchon.vic.gov.au and find a better deal.

        Some retailers have an “upload your bill and we will tell you how much you would have paid with us” – which is interesting technology but ultimately not impartial – nor does it consider all the offers in the market, which is only possible on that government website. I would be stunned if you could not find a better deal elsewhere.

  • heinbloed

    Great news,thanks!

  • Micah Kamau

    promoting wind power in daudi karanja indigenous land in mairi village protected area in kenya