Hey there Flicksters and generally-interested Kiwi electricity users!
We’ve seen some sustained high spot prices lately for those of you on our Freestyle plan, and we’ve had some questions about why.
If you’ve read one of our industry blogs, you’ll have likely got the message by now that the energy market is complex and dynamic. While that is still true (new employees around here frequently experience mild to moderate brain explosions), you’ve told us that you’re after more than the same ole’ message. You want some cold, hard facts and some answers about price projections. We hear you and we’re delivering - strap yourselves in for some full-frontal market info.
This is everything we know as at 12 October, passed through wholesale - exactly the way it should be.
What we know
Gas
There are currently disruptions in the gas market because of a cut in production at the country’s largest gas field Pohokura (run by Shell Exploration NZ; OMV New Zealand Ltd and Todd Energy) due to an issue with the pipeline. We’ve (and by we, we mean ‘the energy market’) received minimal information on the details of how long it’s forecast to continue. A potential shortage of fuel available means that other energy sources, such as thermal plants, may only run at part capacity at particular times, or perhaps even not at all. It also means that prices increase.
The market is meant to be notified about any events that may have a material impact on the price in the wholesale market. Like the market, we have no more detail to offer on the pipeline issues. But rest assured, the more information we are given access to, the more we will pass on - especially if it has or will impact your power bill.
UPDATE AT 15 OCTOBER 2018: SHELL HAS CONFIRMED THAT THE PIPELINE AT POHOKURA IS LIKELY TO REMAIN OUT OF OPERATION UNTIL THE END OF NOVEMBER 2018, MEANING THAT SUSTAINED HIGH PRICES (DUE TO A SHORTAGE IN GAS AVAILABLE ON THE MARKET) WILL LIKELY LAST UNTIL THAT TIME.
UPDATE AT 23 OCTOBER 2018: A SPECIALISED NORWEGIAN VESSEL - THE 3730 TONNE SKANDI SINGAPORE (WHICH IS THE LENGTH OF A RUGBY FIELD!) - HAS DOCKED TO COMMENCE THE REPAIR WORK ON THE POHOKURA PIPELINE. CONTINUING REPAIRS WILL BE DEPENDENT ON WEATHER AND SUB SEA VISIBILITY ACCORDING TO SHELL.
Hydro
We bang on about the hydro-lakes when times are good, so it’s only fair to let you know what’s happening when things are below average. Which they are at the moment. Storage in the country’s hydro lakes dipped below the long-term average back in late August and have continued on a downward trajectory to where they currently sit at 78% of average for this time of year. Why? To date, it has been a dry Spring and this has lifted spot prices above the usual levels for this time of year. The hydro generators, like the thermal generators have adjusted their output and lifted their prices, again representing the scarcity of their fuel - water.
UPDATE AT 2 NOVEMBER 2018: THE HYDRO LAKES HAVE PLATEAUED AND REMAIN STABLE AT 74% OF AVERAGE FOR THIS TIME OF YEAR. THIS LEVEL HAS BEEN ABLE TO BE MAINTAINED DUE TO SOME RECENT INCREASED INFLOWS. THIS WEEKEND’S FORECAST IS LOOKING GOOD TOO: WITH MORE RAIN FALLING IN THE RIGHT CATCHMENT AREAS! WHOOP!
Still with us? Good on ya, there’s a lot to take in!
Future forecasts
Unfortunately, we can’t say with any certainty how long these price conditions will last.
Weather forecasters are suggesting there is a chance we may be in for an El Niño weather pattern - this could have an impact on the spot price depending on how it plays out. What do we mean? El Niño can bring either a South Westerly or North Westerly weather pattern. If it’s South Westerly it means reduced inflow into the large South Island storage lakes of Pukaki and Tekapo, but increased inflows for Manapouri and Te Anau (which will likely result in higher prices). If it’s a North Westerly pattern - which there is speculation it may be - it will be the opposite and will result in lots of inflows to the big storage lakes and most likely lower prices. Remember, this is all still theoretical, but we keep a close eye on NIWA and other forecasting sites to understand what part the weather will play in determining your power bill.
Why Flick?
It may seem like none of the information above gives you the exact answers you want. And that’s exactly why Flick exists - to keep working towards making better information available by asking hard questions during times where things seem strange so that consumers can make better decisions and have less stress when it comes to their bill.
We want a more transparent market that does better at having consumer interests at its heart. It’s for this very reason that we were founded, and why we work hard on the daily to devise a different model and better products.
And it’s important to note, while spot prices may seem higher for our Freestylin’ Flicksters right now, consumers on traditional plans will ultimately pay for the expenses being incurred now when they next review their prices (which is typically done on an annual basis).
Time for a change? You’ve got the choice with Flick!
This is where our fixed price plan, FIXIE comes in - we’ve developed FIXIE as a way of providing our Flicksters certainty during times where you feel unable to ride out the market conditions on Freestyle. We’ve said it before, and we’ll say it again - it doesn’t mean that we don’t believe in the spot model anymore. We absolutely believe in it. It delivers excellent long-term savings, it allows you to load shift with more accuracy and it educates us about our power (the electron kind and the ability to impact the grid kind).
It does mean that if you’re looking at your graph in the Flick app and thinking, ‘hmmm, it’s just not working for me right now’, you have the option to fix your price, take a breather, and reassess in a month or two, or six or more if you’re loving FIXIE’s price certainty! We’ve done a lot of work in the background to hedge FIXIE at a price that’s competitive and that’s an ongoing piece of work for the maths whizzes here at Flick HQ. We’re happy to do a bill comparison whenever you need one and FIXIE’s prices are up on sites like Consumer NZ’s Powerswitch too.
(We’re also working on a self-serve function where you can swap back and forth between FIXIE and Freestyle via the app at any time you like. It takes a lot of tech brainpower and we want it to be awesome for you. Look out for it sometime around late December!).
In the meantime, we suggest you make the most of our load shifting tools to avoid those peak times (which are usually peak times for dirty ole’ carbon emissions too!). And if you really are feeling the heat, we’re here to help - 0800 4 FLICK or hello@flickelectric.co.nz. We can talk through making the most of your app to help your bill, how to use our smooth-pay feature, or chat about our payment plan options.