| 08.05,12. 08:06 AM |
Powerful lure to make the switch
May 08, 2012
ENERGY giants have been forced to slash power prices as an emerging number of smaller retail companies offer discounts of more than 20 per cent - enough to neutralise the 16 per cent average price rise from July 1.
While discounts on regulated rates rarely reached 10 per cent two years ago, privatisation of the NSW electricity market in March last year led to new providers such as Momentum, Powerdirect and Lumo Energy offering good deals to new customers.
Now Dodo Power & Gas is offering discounts of up to 24 per cent across NSW by keeping its overheads low.
Known for its internet and mobile deals, the Melbourne-based company has signed about 15,000 electricity customers since its NSW launch in December, and believes it can attract at least 200,000 households in two years.
Households in Smithfield, in Sydney's southwest, can save $310 on their annual bill by opting for Dodo's $1391 plan compared with Integral Energy's regulated tariff of $1701, while families in Coogee can save $157 if they switch from Energy Australia's $1574 regulated rate to Lumo Energy's Lumo Advantage offer of $1417. Dodo's offering intensified the state's electricity price war, with AGL this week launching a deal providing $500 off a typical bill over three years.
In a desperate bid to steal customers from Origin and TRUenergy, which bought the three government businesses last year, AGL is also offering new customers Flybuys points for every dollar spent on home energy bills.
About 15 per cent of customers - or 420,000 households - change providers each year, according to the Australian Energy Market Operator.Dodo chief Larry Kestelman hoped the switch or "churn rate" will rise further as more households take advantage of unprecedented competition.
"With Dodo, it's a simple proposition. It's a government regulated and strictly guided commodity, and there's no such thing as quality of electricity," he said.
"We're a new entrant and have built all systems and processes from scratch by leveraging from our telecommunications business.
"We bill monthly rather than quarterly so there's little bad debt. We cut to the bone.
"We're happy to make a smaller margin than the big guns but offer better deals."
Fierce competition meant families who did their research can make significant savings.