Before our Flick Electric business model hit the scene, most of us probably associated dry winters with crisp, clear mornings, perfect days on the snow and successfully drying your washing on the clothesline in the middle of winter (yass!).
But, thanks to Dry Winter 2017, we’re all a little wiser now. Because with Flick’s access to the wholesale market and transparent pricing in the mix, we’re able to see just how much seasonal changes can influence the spot price of electricity. And it’s been an enlightening – if occasionally challenging – experience for Flicksters all around the country.
Here at Flick HQ, our awesome and dedicated Customer Experience team has fielded hundreds of questions from customers regarding this year’s Dry Winter. And we think that’s awesome! It shows that people are paying attention to the price of their power and the amount of electricity they’re using, which is one of the reasons we developed the Flick model in the first place.
So, in the interest of keeping Kiwis abreast of the Dry Winter situation, we’ve addressed a few of the most common questions we’ve received over the last few weeks. As we always say, knowledge is power!
First things first – if my bills increase, does Flick keep the money?
Not a drop! Flick’s fees always remain the same. Your higher power bills directly reflect your increased usage and the upward movement of the spot price of electricity, which is all thanks to old mate Dry Winter and the expensive running costs of our back-up generators – keep reading for details.
So, what is a Dry Winter?
Well, in the electricity industry, a Dry Winter occurs when inflow (water from rainfall and snowmelt) is below average for an extended period of time during the winter months. While we can encounter a dry period at any time throughout the year, a Dry Winter coincides with the higher demand (the increased use of power) that the colder months bring.
Here in NZ, hydroelectricity generates around 60% of our power, so when the big hydro lakes (that’s Tekapo, Pukaki, Hawea, Manapouri, Te Anau and Taupo) fall below a certain level, it’s termed a Dry Winter. The lakes are actively monitored by Transpower, the state-owned authority that is responsible for managing our National Grid, to keep us all updated.
How does a Dry Winter affect the price of electricity?
If you’ve been following the Flick blog (or you’re just a #CleverFlicker) you’ll know that the wholesale electricity market is pretty similar to other markets, in that it’s largely influenced by supply and demand. In the winter months, when it’s dark by 5pm and that howling Southerly is blasting through, the demand for electricity is higher because we’re all using lots of power to keep our homes light, dry and warm. And that’s OK, because under normal conditions our infrastructure can cope with these increased demands, and there’s nothing unusual about our power bills. In fact, it’s worth noting that the spot price of electricity tends to be lower during the winter months thanks to our (usually) high rainfall levels. So even though you’re using more power, your winter power bills stay nice and low.
On some occasions though, our clean generators (that’s our hydro stations, geothermal stations and wind farms) can’t supply enough electricity to meet demand. We might see this during exceptional cold snaps, or more rarely as we are now – when our hydro lake levels are low. So what happens then? Well, luckily we’ve got back-up! When our renewable generators can’t meet our energy needs, we turn on our thermal generators that are fuelled by gas, coal or diesel.
But – and it’s a BIG but – our thermal generators have two major flaws. Not only do they produce far more carbon emissions than our hydro stations and wind farms, they’re also a lot more expensive to run. So when we’re relying much more on the thermal generators to meet our needs, it’s these higher thermal operating costs that push up the spot price of electricity on the wholesale market, like we’re seeing now.
How often does a Dry Winter happen and how long do they last?
On average, NZ encounters a Dry Winter every 4 to 5 years (the last was back in 2012), and they tend to last between 3 to 8 weeks.
How long will this Dry Winter last?
To put it bluntly… until it rains! We can expect Dry Winter conditions to hang around until we get solid inflow into our South Island catchment areas, or until we see snow melt, which normally occurs from September. Although it might be raining outside your apartment in Central Auckland, we need this rain to fall into the catchment areas in order for it to impact hydro storage. The spot price of electricity also naturally drops as we move out of winter and into spring, because our demand for power also falls.
What are the current lake levels?
At the moment, our hydro storage is below average for this time of year, particularly in the South Island, which holds around 85% of our controlled hydro storage. If you’re a details person, check out the Transpower website for more specific information on current hydro levels, as well as current risk levels.
What will Dry Winters mean for Flicksters in the long-term?
We’re confident that Flick customers will, in the long run, be much better off on our model. While you can buy your electricity elsewhere at a fixed price, the premium you pay for this security is huge! With Flick, it’s a case of taking a long term view of savings – that means being prepared for the occasional few weeks that you might face higher bills (and possibly negative savings), and understanding that they’ll be more than offset by the many, regular weeks of lower bills (and big savings!). This past year our Flicksters have saved, on average, $479 compared to what they would have paid with their previous retailer. So the big question is: would you prefer to gift that money to your electricity retailer, or keep it yourself?
What if I can’t afford to pay my bill at these higher prices?
Just give us a call. We know that times like these can be tough on Flicksters (that includes us here at Flick HQ too!), and we’re always keen to help our lovely customers out if we can. If you think you’re likely to miss a payment, give us a call on 0800 4 FLICK before Thursday of that week, and we can go over suitable payment plans with you. Remember, we’re here to help!
Can I leave Flick?
You sure can. Obviously we hope that you won’t want to, but we completely understand that our model doesn’t work for everyone all of the time. Here at Flick, we think it’s important that Kiwis find the best power deal for them and their area, so we don’t lock you into fixed-term contracts and we don’t charge you break fees. That means you’re free to leave whenever you choose.
Word to the wise though: if you think a Flick hiatus is on the cards for you, we’d recommend doing some thorough research before you decide who you’re moving to. Be very wary of fixed-term contracts, fixed rates, and sign-up offers that seem too good to be true (because you know what they say…). Download our Guide to Bullsh*t Power Deals to keep yourself informed.
Can I come back?
Absolutely! Make sure you look us up again when the spot price of electricity drops (which it will!). We’d love to have you with us again.