The Blog

Don't stress the stress test

About to become a bonafide Wholesale Flickster? Tū meke, e hoa!

That means you’re about to take a step into the wonderful world of wholesale electricity, where you’ll get direct access to the wholesale spot market - something that’s traditionally only granted to retailers and large industrial consumers of electricity.

Being a Wholesale customer and having access to the wholesale spot market comes with its share of rewards, but there’s also risks involved, too, and it’s partly our job (and partly your job) to make sure you understand what you’re signing up to.

You’re probably already aware of the perks of being on Wholesale - after all, you’re here, signing up! But we do need to make sure you’ve got your head around the risks, too. So, in our humble opinion, what are the main risks of wholesale pricing?

  • Power prices won’t always be low. Sustained, high price events can, and do, happen. We don’t have a spot price crystal ball (we wish!), but on Wholesale there’s always the chance you’ll experience a period of sustained, high spot prices which can impact on your power bills.

  • If you don’t monitor spot prices on your Flick app, you can end up paying more for your power. Your Flick app keeps you clued up on the half-hourly spot prices so you can adjust your power usage - but if keeping an eye on your app isn’t your thing, then you’re more likely to be exposed to periods of higher pricing and miss those sweet, sweet lows. We think Wholesale works well for those who can keep an eye on their alerts, shift their power consumption around, and make quick decisions to change their price plans.

  • There’s no price certainty with Wholesale. That’s the nature of the beast - the price of power on the wholesale market changes every 30 minutes, and it’s largely linked to Aotearoa’s demand for power and the supply of generation that’s available. In other words, there’s lots of room for change! If you’re a stickler for fixed weekly budgets, give some thought as to whether the pricing highs and lows are for you. And if it’s not? No sweat - we’ve got two other price plans for you to choose from.

As part of being able to offer you access to the wholesale market, we also need to share with you the Electricity Authority’s (EA) information around what the industry refers to as a ‘stress test’. Given that it’s created for large consumers of electricity, it’s not especially relevant to our residential customers, but we’re still required to tell you about it (unfortunately, the industry is yet to develop a residential version of the stress test).

So, what is a stress test and why do you need to know about it?

Well, the EA stress tests give you an idea of the extreme prices you might be paying if we were to face unusually difficult market conditions.

  • Test 1’s scenario is for sustained high prices of $400/MWh (or 40 c/kWh) for 3 months due to a shortage of generation (for example, during a drought).

  • Test 2’s scenario is for high prices of $10,000/MWh (or 1,000 c/kWh, or $10/kWh) for a short, 8-hour period due to an unexpected generation shortage during a peak time.

The idea is that you can use this information to work out what you might pay in either of these scenarios - and whether you could afford to pay that increase if those situations occurred.

And how do you work that out?

We’ve pulled together some basic equations below that should help you work out your cost increases under Test 1 and 2. These are simplified versions of the two stress tests set by the EA.

First, you’ll need to get your power bills from the last 3 months and work out your average kWh use (a) over that time (for example, add each month’s usage together and then divide by 3).

Then, you’ll need to work out your Base Case (BC) total, or what you might ‘normally’ pay for power under usual conditions, so that you can compare that with the Stress Case (SC1 or SC2) totals to see the increase in costs.

To work out your Base Case (BC) total, multiply your average kWh usage (a) by 0.10.

E.g. a x 0.10 = BC

Then follow the steps below to work out your cost increases under each Stress Test scenario.

Stress Test 1

Multiply your average kWh usage (a) by 0.40 to work out your Stress Case 1 total (SC1), or what you might pay in Stress Test 1’s extreme conditions.

E.g: a x 0.40 = SC1

Then deduct the Base Case total (BC) from the Stress Case 1 total (SC1) to get an idea of the increase in costs (IC1) under Stress Test 1.

E.g. SC1 - BC = IC1

Stress Test 2

Multiply your average kWh usage (a) by 0.1363 to work out your Stress Case 2 total (SC2), or what you might pay in Stress Test 2’s extreme conditions.

E.g: a x 0.1363 = SC2

Then deduct the Base Case total (BC) from the Stress Case 2 total (SC2) to get an idea of the increase in costs (IC2) under Stress Test 2.

E.g. SC2 - BC = IC2

All going well, you should now have an increase in cost total for both of the stress tests - with the idea being that, from here, you can use this to gauge whether you’d be able to manage paying your bills through an extreme pricing event. And remember, if you notice prices going up further than you’re comfortable with, you can switch to one of our fixed-rate plans at any time - so there’s no need to stress!

Got questions? Feel free to give us a flick us an email at, or give us a call on 0800 435 425, and we’ll help you work through it.