Mojo today said it agreed with AGL Energy Chief’s Executive’s comment that the big retailers take their loyal customers for granted and are vulnerable to disruptors.
The Australian Financial Review reported today that at a Committee for Economic Development lunch Mr Vesey said:
“We reward disloyalty because…I only talk to you about a good deal if you threaten to leave me, and if I want your business I have to steal you away from somebody else. The bulk of my customers that are not disloyal never hear from me and are totally uninformed about what’s in their own best interests. That’s the recipe for digital disruption.”
Mojo Co-Founder James Myatt said that Mojo, which launched in NSW in May, is precisely what Mr Vesey fears.
“Mojo Power (Mojo) is a new electricity retailer with a radically different business model. In a world first, Mojo will not profit by selling more power to its customers who will now be able to access wholesale rates for their household electricity.
“Australian families now have a retailer absolutely aligned to their desire to pay less for the electricity they need. Mojo customers pay a flat monthly subscription, called an EnergyPassTM, to access our wholesale prices which are around 30% below other retailers’ standing tariffs. All Mojo customers whether new or loyal receive the same low prices for their area.
“We know many people are dissatisfied with their electricity retailer. Independent research1 found less than half of all people surveyed think they are being charged fairly for their electricity.
“One reason many don’t change their retailer is because they think it is too hard, with 55% of people surveyed saying switching electricity retailer is a complicated process. The reality is it couldn’t be easier; people can go online and sign up in under three minutes,” Mr. Myatt said.
“The independent research also shows that even though retailers don’t supply the electricity, in NSW, for example, that’s done completely separately by three government-regulated entities, one in five people think switching retailers could actually affect their supply.
“Last week Commonwealth and state energy ministers met to discuss electricity pricing, among other issues. I think it would be very useful if the government helped alert consumers to how much choice is out there and how risk free and easy it is to switch,” Mr Myatt said.
The Mojo model is of most benefit to those households who are above average consumers of electricity, typically those with air conditioning or swimming pools, precisely the customers that the major retailers can least afford to lose.
According to independent analysis by the Australian Consumer, Retailer and Services (ACRS) unit at Monash Business School, NSW families who use more than the average amount of electricity per year would see significant ongoing yearly savings with Mojo, when compared to the three major retailers’ standing tariffs.
Although these retailers do offer discounts, Mojo believes that most customers have either never moved off the standing tariff or their discounts have expired. Mojo points to Origin Energy’s FY 2015 results presentation where the company disclosed that the impact of discounts as a percentage of retail revenue was only 4%. The company believes the picture is similar for the other two major retailers.
To access wholesale prices, customers simply need to visit mojopower.com.au and select the EnergyPassTM option that best suits their needs. Mojo will arrange the transfer of their account from their existing retailer. EnergyPassesTM start at $35 per month, or an effective $23.33 per month, if a customer pays annually up-front.