I see Flick are now advertising on TV that winter savings are now guaranteed. Have they kept back some of their profits to stop people jumping ship in winter??
I see Flick are now advertising on TV that winter savings are now guaranteed. Have they kept back some of their profits to stop people jumping ship in winter??
I wouldn't be surprised they're trying to slow down the flow of people leaving as everyone last year was stung so bad during the winter months. I really don't understand their concept of guaranteed savings when prices are based on the open market rates. Like share prices, no one with certainty can tell what the spot price will be in the short or long term future. As I've mentioned in previous posts, the spot price means nothing but rather, the full price is all what consumers care to see. So just because their app says spot prices are low, it may very well still be higher than competitors with fixed pricing.
Genesis after the 10% discount for low user night rate is 10.95 c/kWhr. What winter spot price do we need to see so Flick's total night rate price will beat Genesis night rate? 4 or 5 c/kWhr? I think not.
In the short term, low prices even out the high prices
In the long term, if spot prices trend higher, fixed price retailers are going to up their prices, they are not going to run at a loss.
That's entirely incorrect due to the makeup of all the different electricity retailers. Your assumption is if the retailer solely buys from the wholesale market rate. Many of the large retailers have their OWN electrical generation (which they would only buy a portion of electricity from the wholesale market) and or own their electrical distribution lines so their final retail price will vary.
I've tried the long term with Flick and I didn't save. Well I did see savings in the summer months of 2016/2017 but all that savings was vaporised in 1 nasty month in the winter of 2017. My rough guess, I over paid with Flick by 20%. I will know more in July's bill as in July 2017 we had our highest bill of $420 with Flick.
Long term it may be that Flick will be disadvantaged as the larger suppliers that own / produce a larger portion of their own electricity will gain a price advantage by selling that power direct to the customer. Yes there is a cost to produce the electricity (ie. wind farms) but no one is generating electricity for the sole purpose of selling it on the wholesale market ; they're far more profitable to sell to the end user.
In the short term, low prices even out the high prices
In the long term, if spot prices trend higher, fixed price retailers are going to up their prices, they are not going to run at a loss.
That's entirely incorrect due to the makeup of all the different electricity retailers. Your assumption is if the retailer solely buys from the wholesale market rate. Many of the large retailers have their OWN electrical generation (which they would only buy a portion of electricity from the wholesale market) and or own their electrical distribution lines so their final retail price will vary.
I've tried the long term with Flick and I didn't save. Well I did see savings in the summer months of 2016/2017 but all that savings was vaporised in 1 nasty month in the winter of 2017. My rough guess, I over paid with Flick by 20%. I will know more in July's bill as in July 2017 we had our highest bill of $420 with Flick.
Long term it may be that Flick will be disadvantaged as the larger suppliers that own / produce a larger portion of their own electricity will gain a price advantage by selling that power direct to the customer. Yes there is a cost to produce the electricity (ie. wind farms) but no one is generating electricity for the sole purpose of selling it on the wholesale market ; they're far more profitable to sell to the end user.
If spot prices trend higher, a gentailer will increase the cost to it's retail customers. They are profit maximising organisations, if their generation arm can make more money selling on the spot market, then their retail prices will converge until that is no longer the case. They also have shortfalls to account for, all the hydro generators had to purchase lots of thermal generation last winter. Some paid spot, some had hedge contracts with genesis. If spot prices go up you either pay that directly, or the cost of those hedge contracts will go up the next time it's renewed.
In the long run, all else being equal, a retail offering like Flick's should be cheaper than a fixed price retail offering because the consumer is dealing with the cashflow volatility rather than the retailer - even if a retailer has its own generation there is uncertainty about future spot prices and their market share which is added to the fixed price they charge.
However, all is not equal so your results may vary - consumers in different locations with different load profiles and at different times will have different results. That is why this thread is and will remain useful.
Some people's calculations suggest that the savings from being on Flick are marginal or negative for them. Some of these cases may be to do with the complication of the low user tariff but even without that, low users will necessarily see lower benefits than higher users, in general. Other retailers offer rates that apply to large areas of the country and that means that some consumers are relatively better off than others in those areas because spot prices vary across the transmission network (at least by loss factors but by more where there is congestion). And, of course, your experience with Flick will be different if you had a few years where you made significant savings ($500 a year for me) before heading into winter 2017.
In the long run, all else being equal, a retail offering like Flick's should be cheaper than a fixed price retail offering because the consumer is dealing with the cashflow volatility rather than the retailer - even if a retailer has its own generation there is uncertainty about future spot prices and their market share which is added to the fixed price they charge.
However, all is not equal so your results may vary - consumers in different locations with different load profiles and at different times will have different results. That is why this thread is and will remain useful.
Some people's calculations suggest that the savings from being on Flick are marginal or negative for them. Some of these cases may be to do with the complication of the low user tariff but even without that, low users will necessarily see lower benefits than higher users, in general. Other retailers offer rates that apply to large areas of the country and that means that some consumers are relatively better off than others in those areas because spot prices vary across the transmission network (at least by loss factors but by more where there is congestion). And, of course, your experience with Flick will be different if you had a few years where you made significant savings ($500 a year for me) before heading into winter 2017.
The wholesale spot price is just that, the price electricity producers sell and the price the retailers buy it at to sell to the consumer. The spot price will ALWAYS be higher than what it costs to generate. To the retailer that generates it's own electricity, 'cash flow volatility' is not even in the picture because their margins for profit are determined in house (not having to buy on the wholesale market to on-sell it to their customers, but rather being able to produce electricity cheaper than the wholesale spot rate). Unfortunately Flick is not in this position as they're just only a middle man for which they just tack on their fixed 3-6c ? /kW/hr margin on the going spot price.
The huge variance in electricity pricing from region to region is due to market control by various suppliers and retailers. You can be sure regions that want to own their lines and market share will make it hard for Flick to make a profit as in here in Christchurch, the Orion Network imposes sur-charges on to Flick. There is no stopping them from increasing these non-competitive charges. It may very well be that the Orion Network has contractual relationship with Genesis Energy so that they can sell at a price advantage. As I posted before, i'm waiting for a reply for a Flick user in Christchurch to show their night rate goes under 10.95 c/kW/hr (the price that Genesis offers after the 10% discount).
Having a background in finance, I can tell you the options & futures market provides a valuable tool for hedging risk. Any major retailer would want to hedge prices in best interest for protecting profits. Unfortunately Flick's model is to supply electricity unhedged (so instead of the corporate losing the profit, the customers loses, and Flick has none of that risk). Would you rather have the private corporations share part of the risk with the customers or a company that dumps all the risk on to the customer that Flick does?
Then there's the efficient use of time aspect. I mean it's a lot of work to keep checking your app for the price of electricity that hour and then make a decision to do we cook that roast in the oven or not? At one point I was wasting a lot of time checking the app like 20 times a day or every 30 minutes.. which time could of been spend doing something more productive. To save $500 out of the whole year's use of electricity.. there are betting things to worry about. That's what I keep telling other door knocking electricity retailers. I told them a 5% difference isn't going to make people to switch.
SBQ's post wins the thread. Great post and summary. Flick does appear to have many benefits and advantages but if you can find an affordable retailer, I think the small premium you pay for them to manage the risk is worth it to be able to turn on an appliance if and when it is really needed.
I like that Flick and EK try to manage consumption but I never really found the model to be that attractive in the pricing that I looked at. I think SBQ has just explained what I couldn't explain as to why.
Going forward, a retailer that can implement better time shifting of electricity use and can offer best if both worlds would be ideal.
As I posted before, i'm waiting for a reply for a Flick user in Christchurch to show their night rate goes under 10.95 c/kW/hr (the price that Genesis offers after the 10% discount).
I already replied. Once you know the fixed off-peak rate it's easy to go to sites like em6live to check overnight spot rates. It goes below 10.95c a lot... I'm not sure why you doubt this?
As I posted before, i'm waiting for a reply for a Flick user in Christchurch to show their night rate goes under 10.95 c/kW/hr (the price that Genesis offers after the 10% discount).
I already replied. Once you know the fixed off-peak rate it's easy to go to sites like em6live to check overnight spot rates. It goes below 10.95c a lot... I'm not sure why you doubt this?
Because the 10.95c I speak of is the TOTAL Genesis price they charge to end user. Your spot rate you see online is only a wholesale rate, a small portion of the total price and you know we're talking a price that varies a lot every 30 minutes. But there's no point in trying to do all these math adding. just use Flick's Choice App. How often is it for Christchurch residents to be lower than 10.95c ? Maybe 2% of the time? Since i'm no longer a Flick customer, i'm curious on existing Flick customers what the going Flick rate is. (to see if i'm really losing out or not).
Last year I recall Flick Facebook posted a really low spot rate of like 4c/kW/hr but when I looked at my Flick app, it was like 3 times higher, meaning, the spot rate is meaningless to the end user, what I told Flick is all that the consumer cares about is the total end price (like everything else you buy).
God damn Flick's pricing schedule is confusing. I'm in Christchurch on the high user plan. I pay
5.886c fixed + spot OFF PEAK (9pm-7am weekdays and all weekend) 23.089c fixed + spot WINTER PEAK (7am-10am & 5pm-7pm May-August) 14.009c fixed + spot NORMAL (all other times)
This winter, this translates to roughly 8-12c off peak, 19-24c normal, and 30c upwards winter peak (tends to shoot up only when there's a cold snap).
We have a gas heater that usually gets turned on in winter peak times, just so we don't need to worry.
So what you need to do is add the spot price to 5.886c to get the total price (before gst?...). If em6live says $50/MWh this translates to 5c/kWh (and $100/MWh would be 10c/kWh, etc). Last night it was average about 6c: http://www.em6live.co.nz/PlanningRegion.aspx?planningregion=usi, but it has generally been lower than this earlier this winter.
So, like I said, it goes below 10.95c a lot. I'm not confused as you seem to be implying.
Assuming Low User pricing: From Flick's Pricing Schedule 8.646c + Spot. To be less than 10.95c, the spot rate has to be lower than 2.304c you really sure prices have gone down lower than $23/MWh ? I think not in winter months. Does em6live show historical pricing for non-registered account users?
Assuming Low User pricing: From Flick's Pricing Schedule 8.646c + Spot. To be less than 10.95c, the spot rate has to be lower than 2.304c you really sure prices have gone down lower than $23/MWh ? I think not in winter months.
For a low user I would agree... it doesn't happen very often.
dunnersdude: SBQ's post wins the thread. Great post and summary. Flick does appear to have many benefits and advantages but if you can find an affordable retailer, I think the small premium you pay for them to manage the risk is worth it to be able to turn on an appliance if and when it is really needed.
I like that Flick and EK try to manage consumption but I never really found the model to be that attractive in the pricing that I looked at. I think SBQ has just explained what I couldn't explain as to why.
Going forward, a retailer that can implement better time shifting of electricity use and can offer best if both worlds would be ideal.
Win the thread? It doesn't get my vote! Retailers can't be as altruistic as you and SBQ suggest or those on Flick wouldn't have saved so much money. I agree that if you find Flick does not offer you savings then you are obviously better off going with the alternative but lets not kid ourselves that retailers would prefer to offer consumers a better deal than they can make from the spot market (concept of opportunity cost).
Actually, the fortunes of Flick will determine who is right! If Flick grows its market share then I am right as its customers must be better off with it than the traditional retail offering (ie saving money). If Flick's customer base does not grow or shrinks then you are right and consumers must be getting more value from traditional retailers than I thought.
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