Genesis Energy revolutionary flat rate gas plans: Are they good value?

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#1822173 13-Jul-2017 22:35

Pumpedd:

Reticulated gas price is my largest gripe on my power bill. I have no idea why gas is so expensive especially the daily charge that now exceeds 1$/day whether you use it or now.

My plan over the summer is to rip out gas and replace my gas hot water cylinder with an electric one. The hear pump I installed last summer has a running cost of approx half of the flued gas heater. No brainer.

Which model flued gas heater do you have? And can you switch to electric hot water while still keeping your power usage below 8000 units per year or 666 units per month? If not then you will need to move to an electricity plan that has more expensive daily charges. At least $1.60 per day just for electricity.

Aredwood

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#1822180 13-Jul-2017 22:50

mattwnz:

Detruire:

Pumpedd:

DjShadow:

Pumpedd:

Reticulated gas price is my largest gripe on my power bill. I have no idea why gas is so expensive especially the daily charge that now exceeds 1$/day whether you use it or now.

My plan over the summer is to rip out gas and replace my gas hot water cylinder with an electric one. The hear pump I installed last summer has a running cost of approx half of the flued gas heater. No brainer.

Have you looked at converting to LPG?

That amazes me as well....we can bottle gas...truck it around the country and its cheaper than reticulated gas. Something seems quite wrong with reticulated gas charges.

It's not so amazing when you think about how much easier it is to deal with bottles than a city-wide network of pipes.

Not sure about that. The gas infrastructure is already there. Are they charging to cover upgrading it in the future? Or whether it becomes uneconomic to replace, and just put eveyone on cylinders. I would have though the cost of purchasing, managing, transporting, certifying cylinders etc would be far more. We don't don't do that with water and piping it around.

LPG via the 45KG cylinders is about 16.4c per kW/hr inc GST. So more than double the price of piped gas. And you still have to pay a yearly bottle rental fee which is equivalent to 33c per day.

The only reason you are getting cheap daily fees for electricity is that you are on a low user plan. If you use more than 8000 units / year or 666 units per month. It is cheaper to go onto standard user. And pay $1.60+ per day in electricity lines fees.

As for heatpump hot water cylinders - They are not as efficient as heatpump room heaters. As they have to do approx double the temp rise (and sometimes more) than what a heatpump room heater does. And some of them can't work when the outside temp is close to or less than 0deg. So they use a normal electric element when outside temps are too low.

frednz

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#1822254 14-Jul-2017 09:20

Inphinity:

We looked at it recently, and found unless you're using 99% - 100% of the allowance, but no more, it's not worth it. Works out better to just pay standard charges in a lot of use cases.

That's a good observation, but I suppose I like the idea of a fixed plan because it gives you certainty of what you have to pay for gas each month. And if you have a plan that gives you a lot more kWh than you are likely to use, then you can relax and use as much gas as you like on those freezing nights!

Don't you think that the problem with being on a plan which you are likely to use 100% of the allowance is that you would need to be doing frequent calculations to ensure that you don't go over the limit (similar to range anxiety with an electric vehicle)?

Lizard1977

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#1822261 14-Jul-2017 09:32

frednz:

Inphinity:

We looked at it recently, and found unless you're using 99% - 100% of the allowance, but no more, it's not worth it. Works out better to just pay standard charges in a lot of use cases.

That's a good observation, but I suppose I like the idea of a fixed plan because it gives you certainty of what you have to pay for gas each month. And if you have a plan that gives you a lot more kWh than you are likely to use, then you can relax and use as much gas as you like on those freezing nights!

Don't you think that the problem with being on a plan which you are likely to use 100% of the allowance is that you would need to be doing frequent calculations to ensure that you don't go over the limit (similar to range anxiety with an electric vehicle)?

I suppose the counter argument would be to budget for the cost of the fixed plan in terms of payment but to be on the standard rates. In practice it works out the same. If you use less, then you pay less and you spend under your budget. If you use exactly 100% of the allowance, then the cost will still be slightly under the budget (as shown above, the per unit cost is cheaper than the flat rate plan). If you go over the "allowance", then you will pay more, but then that would happen even if you are on the flat rate plan. The only way the flat rate plan would be of benefit is if it actually worked out cheaper than paying as you go at some point. But as I found, the cost of the same amount of gas plus daily charges is always going to be less than paying for it as a flat rate. To me, that just doesn't stack up no matter how you slice it. If you want certainty, then I would estimate your costs (using the flat rate if you like) over the course of the year and then divide it by your preferred payment frequency (weekly, fortnightly, monthly) and pay that amount by direct credit. If you slightly over-estimate the amount then you will likely build up a credit in summer that can help smooth out the lumpier costs in winter.

Lizard1977

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#1822276 14-Jul-2017 09:44

Just re-reading through some of the earlier posts, it sounds like the cost-benefit of the flat rate plans will depend on what you would pay on the "standard rates." Here in the Manawatu, on the e-Saver Lifestyle plan I would be paying 153c daily charge and 4.27c per unit (excl. GST). For me, then, to use 20833 units of gas (the highest flat rate plans) the total cost would be $1665 (GST inclusive). The cost of the flat rate plan would be $1908. The same 12% discount applies to both options, so the cost would be lower in both cases, but still cheaper for me to pay as I go. Assuming the daily charge is the same around the country, the flat rate plans reach parity when the per unit costs hit about 6.076c. Above that, and the flat rate plans are cheaper. So whether the flat rate plans are worth it will depend entirely on what the standard rates are in your part of the country.

frednz

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#1822282 14-Jul-2017 09:58

Lizard1977:

frednz:

Inphinity:

We looked at it recently, and found unless you're using 99% - 100% of the allowance, but no more, it's not worth it. Works out better to just pay standard charges in a lot of use cases.

That's a good observation, but I suppose I like the idea of a fixed plan because it gives you certainty of what you have to pay for gas each month. And if you have a plan that gives you a lot more kWh than you are likely to use, then you can relax and use as much gas as you like on those freezing nights!

Don't you think that the problem with being on a plan which you are likely to use 100% of the allowance is that you would need to be doing frequent calculations to ensure that you don't go over the limit (similar to range anxiety with an electric vehicle)?

I suppose the counter argument would be to budget for the cost of the fixed plan in terms of payment but to be on the standard rates. In practice it works out the same. If you use less, then you pay less and you spend under your budget. If you use exactly 100% of the allowance, then the cost will still be slightly under the budget (as shown above, the per unit cost is cheaper than the flat rate plan). If you go over the "allowance", then you will pay more, but then that would happen even if you are on the flat rate plan. The only way the flat rate plan would be of benefit is if it actually worked out cheaper than paying as you go at some point. But as I found, the cost of the same amount of gas plus daily charges is always going to be less than paying for it as a flat rate. To me, that just doesn't stack up no matter how you slice it. If you want certainty, then I would estimate your costs (using the flat rate if you like) over the course of the year and then divide it by your preferred payment frequency (weekly, fortnightly, monthly) and pay that amount by direct credit. If you slightly over-estimate the amount then you will likely build up a credit in summer that can help smooth out the lumpier costs in winter.

Thanks, some very good tips there, perhaps there is more to all this than I thought!

You say that:

"The only way the flat rate plan would be of benefit is if it actually worked out cheaper than paying as you go at some point."

I suppose there aren't many people who would pay for a plan that gives them more capacity than they need simply for "peace of mind"!

But, even these people, if there is a lot colder and longer winter than usual, might end up using close to the allocation and therefore get the year's gas for less cost with the fixed plan when compared with paying on standard rates.

In other words, the fixed plans must be designed in such a way that it's cheaper to be on them than paying the standard rates, particularly when you use close to the 100% limit. If this weren't the case, wouldn't everybody choose to go on standard rates?

Lizard1977

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#1822286 14-Jul-2017 10:10

Pretty much. I think its because the way gas is priced around the country differs from the way other flat rate products are priced. For instance, a cellphone plan will be the same price in Auckland as in Dunedin, but with gas the price you pay is dependent on where you live. So some parts of the country will be expensive to pay as you go, and the flat rate plans make sense. But in other parts where it's cheaper, there's no value in going with a flat rate plan. For a company like Genesis, though, it might be an unnecessary complication to only offer those flat rate plans in parts of the country, so they offer them nationwide and probably make a profit on those who don't crunch the numbers properly beforehand to work out the true cost.

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dolsen

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#1822288 14-Jul-2017 10:16

frednz:

In other words, the fixed plans must be designed in such a way that it's cheaper to be on them than paying the standard rates, particularly when you use close to the 100% limit. If this weren't the case, wouldn't everybody choose to go on standard rates?

You would expect the fixed plans to be cheaper than the pay as you go. If you sit down and calculate using the assumption that you use exactly 100% of the fixed plans (best case and not likely scenario), you will find that in some areas (mine at least) that the fixed plans are more expensive than the pay as you go plans. Therefore, you are better off on the pay as you go plans. The assumption that the fixed price plans are always cheaper is not correct.

It's like buying the large 800g "value pack" of cereal at $8 instead of the smaller 500g box at $4.50. Not always the best choice.

You need to calculate the crossover points for yourself as they are different in different areas due to different prices throughout the country.

Inphinity

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#1822290 14-Jul-2017 10:17

frednz:

In other words, the fixed plans must be designed in such a way that it's cheaper to be on them than paying the standard rates, particularly when you use close to the 100% limit. If this weren't the case, wouldn't everybody choose to go on standard rates?

Here's an example we worked through recently. I'm conscious gas rates can vary quite a bit in some cases between provider and region - in this case I'm using Genesis' own pricing of their eSaver Lifestyle plan to compare to their flat rate plan

12,000kwh/year

Flat Rate: $129/month or $1548/year; 12% prompt payment discount = $113.50/month or $1362/year

Casual rates: $1.10/day + $0.0563/kwh excl GST; ((365*1.10) + (12000*0.0563)) *1.15 = $1239/year or $103/month

So at that usage level, even with the 12% discount, it's about $10.50/month cheaper on standard rates. Unless of course I'm missing something. When we compared we calculated against our actual billed rates, whereas here I've used those Genesis publish.

frednz

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#1822615 14-Jul-2017 17:50

Inphinity:

frednz:

In other words, the fixed plans must be designed in such a way that it's cheaper to be on them than paying the standard rates, particularly when you use close to the 100% limit. If this weren't the case, wouldn't everybody choose to go on standard rates?

Here's an example we worked through recently. I'm conscious gas rates can vary quite a bit in some cases between provider and region - in this case I'm using Genesis' own pricing of their eSaver Lifestyle plan to compare to their flat rate plan

12,000kwh/year

Flat Rate: $129/month or $1548/year; 12% prompt payment discount = $113.50/month or $1362/year

Casual rates: $1.10/day + $0.0563/kwh excl GST; ((365*1.10) + (12000*0.0563)) *1.15 = $1239/year or $103/month

So at that usage level, even with the 12% discount, it's about $10.50/month cheaper on standard rates. Unless of course I'm missing something. When we compared we calculated against our actual billed rates, whereas here I've used those Genesis publish.

Thanks for that comparison, it's really interesting.

If you are paying casual rates for gas, is there a 10% discount allowed for prompt payment - you don't seem to have allowed for this?

Also, the "flexible price" for Auckland is 7.61 cents per kWh excluding GST. Perhaps this price should have been used for the comparison by existing customers? In other words, I'm not sure who is eligible for the eSaver price, is it just for new customers?

frednz

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#1822620 14-Jul-2017 18:03

Lizard1977:

Pretty much. I think its because the way gas is priced around the country differs from the way other flat rate products are priced. For instance, a cellphone plan will be the same price in Auckland as in Dunedin, but with gas the price you pay is dependent on where you live. So some parts of the country will be expensive to pay as you go, and the flat rate plans make sense. But in other parts where it's cheaper, there's no value in going with a flat rate plan. For a company like Genesis, though, it might be an unnecessary complication to only offer those flat rate plans in parts of the country, so they offer them nationwide and probably make a profit on those who don't crunch the numbers properly beforehand to work out the true cost.

Yes, the prices do vary considerably depending on where you live.

This page on the Genesis site lists 18 different districts and the natural gas prices for each of these districts.

I'm surprised that people in some districts are able to get their natural gas much cheaper than people in other districts. Why doesn't Genesis just average the prices out so everyone pays the same rates? That would seem much fairer to me!

dolsen

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#1822621 14-Jul-2017 18:07

frednz:

Also, the "flexible price" for Auckland is 7.61 cents per kWh excluding GST. Perhaps this price should have been used for the comparison by existing customers? In other words, I'm not sure who is eligible for the eSaver price, is it just for new customers?

From the e-saver terms page https://www.genesisenergy.co.nz/esaver-12month-terms

It appears that existing customers are eligible as long as they are not currently on a fixed term plan.

1. a. ii "an existing Genesis Energy natural gas customer not currently on a fixed term plan (including a Gas Value Plan) or an LPG customer; or"

Scott3

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#1822708 14-Jul-2017 22:39

frednz:

I'm not sure who is eligible for the eSaver price, is it just for new customers?

eSaver is a 1 year plan. You get a slight discount in return for promising them your business for a year.

Scott3

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#1822709 14-Jul-2017 22:44

frednz:

Yes, the prices do vary considerably depending on where you live.

This page on the Genesis site lists 18 different districts and the natural gas prices for each of these districts.

I'm surprised that people in some districts are able to get their natural gas much cheaper than people in other districts. Why doesn't Genesis just average the prices out so everyone pays the same rates? That would seem much fairer to me!

Each area typically has a different company that owns the local pipes they have different fee structures. In Auckland it is vector, their rates make between 1/2 & 1/3 of what you pay for gas, so it is quite material to the cost of supply. I assume the transmission pipeline's cost recovery varies by area too, but don't know for sure.

For example manawatu seems to have a higher daily fee, and lower per kWh charge than Auckland. This would (comparatively) favor high users.

frednz

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#1822873 15-Jul-2017 13:37

dolsen:

frednz:

Also, the "flexible price" for Auckland is 7.61 cents per kWh excluding GST. Perhaps this price should have been used for the comparison by existing customers? In other words, I'm not sure who is eligible for the eSaver price, is it just for new customers?

From the e-saver terms page https://www.genesisenergy.co.nz/esaver-12month-terms

It appears that existing customers are eligible as long as they are not currently on a fixed term plan.

1. a. ii "an existing Genesis Energy natural gas customer not currently on a fixed term plan (including a Gas Value Plan) or an LPG customer; or"

Thanks for that, I was working on what it said about eSaver eligibility here:

https://www.genesisenergy.co.nz/for-home/pricing-plans/gas-pricing-plans/auckland

"Offer is only available to new residential electricity customers who pay by direct debit and receive bills by e-mail. Not eligible for additional dual fuel discounts. Eligibility criteria, 12-month fixed term plan and offer terms and conditions apply."

But, as you have correctly pointed out, you also need to read the detailed "eSaver 12 months terms and conditions as at 22 May 2017."

So, this 12-month contract eSaver option needs to be considered seriously because in several instances it is likely to be cheaper than the 12 month "revolutionary flat rate gas plan".

It makes me wonder whether the 12-month flat rate gas plans are so revolutionary?? After all, it seems that the 12-month eSaver is even more revolutionary in many cases, depending on where you live!

Now why doesn't Genesis refer to the eSaver options on its revolutionary gas plan page?

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