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Consumer Switching Fund

The Consumer Switching Fund is a $5m per year contestable fund for three and a half years (1 November 2010 - 30 April 2014) to promote to consumers the benefits of comparing and switching retailers and to improve the capability of the Consumer Powerswitch website. This is being delivered by a campaign called What's My Number. This section contains background to the Consumer Switching Fund, and the approach the Authority is taking to implement and manage the Consumer Switching Fund.

The purpose of the Consumer Switching Fund is to promote competition in the electricity market.

In this section you will find:

What's My Number

What's My Number is the central programme of activity for the Consumer Switching Fund. It is a campaign developed to provide consumers with information about the ability to switch power suppliers, the ease of switching and the potential savings consumers can make on their power bills by switching.

The campaign encourages New Zealanders to shop around for power.

The campaign includes this website which allows consumers to see how much they may be able to save on their power bills by switching retailers. A simple calculator, provided by Consumer Powerswitch, helps consumers assess their potential savings. Users can then click through to the Consumer Powerswitch website to allow them to see details of the different offers available and decide whether to switch.

Consumer switching encourages retailers to become more competitive. What's My Number and Consumer Powerswitch are about consumers having power at competitive prices.

Campaign statistics

The following statistics will be updated monthly:

Key statistics	29 May 2011 to 30 April 2012
No. of visitors to What's My Number website	645,691
No. of unique visitors	501,683
Average time spent on the website	2 minutes & 34 seconds
Switches completed in June 2011 - April 2012	366,151

Figure 1: Comparison of completed switches January 2010 to 30 April 2012

Figure Notes:

This figure illustrates completed switches recorded in the month the switch was initiated.
Switch counts are subject to change as further switches are completed, and withdrawals are processed.
The numbers in the parenthesise in the legend are the total across the period shown.

First review of the What’s My Number Campaign

The Authority has conducted a review of the What’s My Number campaign and of the broader Consumer Switching Fund. The review focuses on the first seven months of activity from 1 June to 31 December 2011.

What's My Number - A changing landscape for NZ electricity consumers

Background

The 2009 Ministerial Review of the electricity industry estimated that residential consumers could save on average $100 a year (or $150m a year in total across all consumers) by switching to the cheapest available retailer. It also noted that "consumer switching puts real pressure on retailers to improve their offerings".

The Authority estimated, for the 2010 calendar year, the average annual household savings available was $150, and the national savings total that could be achieved if all consumers were to switch to the cheapest retailer in their region was $240 million. For the 2011 calendar year the Authority has estimated, the average annual household savings available is $165 and the national savings total that could be achieved if all consumers were to switch to the cheapest retailer in their region is $280 million.

Cabinet agreed that the cost of the fund would be met from the levy on electricity retailers. Specifically:

$1.5 million per year will be administered by the Ministry of Consumer Affairs (MCA) to upgrade and promote the Consumer Powerswitch website; and
$3.5 million per year will be administered by the Authority to develop and administer cost effective programmes to facilitate and promote to consumers the benefits of comparing and switching retailers.

The Authority, MCA and Consumer NZ are working closely together to ensure an effective campaign for consumers.

The Authority's approach to the Consumer Switching Fund

The first key activity was the development of the Consumer Switching Fund Research Report (Research Report) which covers:

The size and nature of the potential economic benefits from different levels of switching;
The nature and relative magnitude of the barriers to achieving the potential benefits;
What should be done over the next three years to address the barriers and realise the potential benefits (the cost effective programmes); and
How to measure the success of the Consumer Switching Fund.

The findings from the Research report informed the approach the Authority, working with the MCA, has taken in implementing and managing the Consumer Switching Fund. This approach is outlined in the Consumer Switching Fund Joint Strategy.

The Consumer Switching Fund Research report

At a high level, the Research report development has confirmed:

Customer 'stickiness' in the New Zealand electricity market means that incumbent retailers generally charge prices that are above the most competitive offer; and
There are both financial and behavioural barriers to achieving an efficient level of switching.

The research has identified a range of measures to address the barriers to switching and to increase the propensity of consumers to switch.

At this stage, the programmes are:

What's My Number - Providing information to consumers regarding their ability to switch power suppliers, the ease of switching and the potential savings consumers can make on their power bills by switching.
Contracting with switching facilitators:
- Citizens Advice Bureau - assisting consumers to compare and switch power suppliers by explaining to them the benefits of comparing and switching power suppliers and, if required, taking them through the What’s My Number and Powerswitch websites;
- Vendor Sales Support Limited – have been engaged to train nominated budget advice centres on how to assist their clients to compare and switch power suppliers.
A switching tool for small to medium-size businesses (SME) – Switch Me Limited has been engaged to introduce an online tool to help the SME community shop around for power – in development for launch in Winter 2012.
Education activities by the Authority - Planning is underway

In addition to the above programmes, being delivered by the Authority, the MCA is responsible for upgrading and promoting Consumer NZ's Powerswitch website.

National surveys

In establishing the strategy for the Consumer Switching Fund, one of the key pieces of work that the Authority undertook in 2011 was a national switching survey to measure consumer and small and medium enterprise (SME) awareness, attitudes and behaviour regarding switching.

The 2011 survey provided the Authority with a benchmark to measure changes in switching decision-making and behaviour and provide input into the What’s My Number campaign approach. National surveys will be undertaken annually (over the life of the Consumer Switching Fund).

Surveys undertaken to date:

Campaign Tracker Surveys

In addition to an annual national survey, the Authority is conducting periodic `tracker’ surveys to monitor the effectiveness of the What’s My Number campaign.

The Authority has, to date, conducted three `tracker’ surveys, one prior to the campaign launch in May 2011, one seven weeks into the campaign (July 2011) and then the third after the campaign marketing stopped (October 2011).

Further updates

This page will be updated regularly.

Authority contact

If you have any questions regarding the project, please contract Todd Collings, the Consumer Switching Fund programme manager at todd.collings@ea.govt.nz or 04 462 0602.