About six months ago I asked the question: Will Powershop save me money? Based on my projections at the time I concluded that the savings weren’t really enough to me jump personally, though I was, and remained, interested in the concept.
Eventually curiosity got the better of me, and I joined up anyway. I was satisfied that I’d save at least some money, and so long as I handled the details R. was happy for me to go for it.
I was pretty impressed with Powershop‘s signup process1. Once I was into the website proper—after two and a half weeks looking at the screen you see here while everyone waited for my old power company to sort themselves out—there was a lot to take in. It didn’t take too long though before I’d explored all the areas and was ready to make a purchase. Which I did. And it turned out there were some significant savings to be had.
There seems to me to be two parts to saving money with Powershop:
- via cheaper unit prices; and
- through becoming more aware of your power use habits, and using that awareness to use less power.
I’m pretty sure that I’ve saved money on both counts in the last month.
The first is relatively easy to calculate. I have come up with a consolidated unit price as charged by my previous supplier of 21.81 cents per unit2 – a bit like a break-even price. Any time I purchase power from Powershop that is cheaper than this, I am saving money; and conversely of course, every time I purchase power from Powershop that is more expensive than this, I am losing compared to my previous supplier.
Six months ago when I first looked at Powershop, I had thought to be losing money at this time of year; and in fact the price of winter power that Powershop was offering back then was 22.49 cents per unit. This is to be expected: demand rises in the wintertime; and this causes a rise in the wholesale prices. Come summertime however, we would expect the Powershop prices to have dropped back significantly below my break-even price.
What actually happened though was more interesting. With the southern lakes full, and the month of August being mild weather-wise, supply of power was plentiful and demand was weakish. You can see this for yourself by looking at the Electricity Commission’s Wholesale Market reports. The graph I’ve lifted (below) from the 23 August report shows that wholesale power prices this time last year were up to 20 times higher than they are now3, and that on many days, demand this time last year was higher.
So Powershop has been able to pass on some of these savings to its customers through cheaper unit prices. I’ve calculated that over the month and a half of power I’ve purchased so far on Powershop, I’ve saved $37.52; a saving which does not include the $50 joining promo I managed to find4. This is unexpected, and pleasing5 – I had expected to be saving only around $70 over the entire year!
The second source of savings, those relating to behavioural changes that cause us to consume less, is less easy to measure. While the obvious measure of our behavioural changes would be the size of any decrease in the number of units consumed each day, compared to previous years, this figure is also affected by externalities like the weather, and water temperatures going into the hot water cylinder. But what the hell, let’s do some calculations now.
During August it turned out that we used considerably less power than we do usually. Our long-term (last six years) daily average consumption for July and August is 37.1 units per day (with it being closer to 40 in the last two years). For most of August this year, we’ve been around 30-32 units per day. I know this because Powershop provides a handy graph of our daily usage, based on the meter readings I have become mildly obsessed with entering every couple of days or so.
While much of this could be due to the warmer weather, switching to Powershop has made us more aware of our usage. We’ve been turning off lights, and heated towel rails, for example, and we recently decided (unrelated to the switch) that our girls were old enough now not to need their bedrooms heated at night6 all the time.
We’ll be better placed to measure the effect of any behavioural changes at the end of our first year with Powershop—we probably need to see some ups and downs of weather to help average out those externalities—but I’m convinced that Powershop has altered our behaviour for the better. And that also, is pleasing7.
So, to summarise then: we’ve switched. Our savings, even after a month, are very real. We’ve modified our behaviour to use less power, though the effect of this is, as yet, indeterminate. But overall, I’m very happy with my Powershop experience.
Update September 8, 2010: After a year on Powershop, we’ve saved quite a lot; read more at Powershop: the first year.
1 The website couldn’t be easier – all you need is a power bill, and optionally your bank account number (they have online Direct Debit setup, if you wish to pay that way, something I had thought could not be done). Once you are in and committed, they give a clear indication of when they think you will change over; and they communicate with you frequently and appropriately during that period. There’s also a telephone help desk staffed by real people who don’t seem to make you wait; and in any case you can email them if you’d rather. I think that other companies with online presences need to take a close look at Powershop, and be taking notes. It’s one of the best signup processes I’ve ever experienced.
2 Your figure will be different – here’s how I calculated mine. To compare what I would have paid with my previous supplier (Meridian) with what I’m paying now with Powershop, I need to convert their prices, a mix of fixed daily and unit prices, into something comparable to Powershop’s unit-only prices. On my last Meridian bill, the unit price was 20.66 cents (including the Electricity Commission Levy); while the daily charge was 96.74 cents. Looking at the two calendar years 2007-8 we used 19,741 units in total. Using this information, and assuming that we’ll always receive the 10% “prompt payment discount” that our previous supplier offered (bloody rort!), I get an estimated consolidated unit price for our household of 21.81 cents per unit.
3 Sometimes I think that smoothing out this excessive price volatility is really the only added value service regular power companies perform. And they charge an awfully large premium for this service.
5 One thing to remember though: if next winter is dry, then all this year’s savings could go out the window. Don’t spend them too soon!
6 For which I had purchased two of those brilliant Honeywell home thermostats, which we had set to 15°C year around.
7 I think this alone is worth switching for, and also that anyone who thinks of themselves as green should sign up to Powershop to gain access to their monitoring tools.