TiP

It’s too, too much!

I have enough trouble keeping up with energy developments and with politics and now the world in my other big interest, the media, is turning over.

As Fairfax Media and News Ltd gear themselves to make significant changes, the implications for the energy industry are not trivial.

In this new environment, where media Titans will go head to head even more competitively, expect still greater attention to energy issues, and especially to energy security and energy prices.

This week’s intervention in the electricity market by the News Ltd tabloids to promote bulk discounts for household and small business customers via the One Big Switch organisation, set up by former Kevin Rudd adviser Lachlan Harris, is a case in point and more than interesting.

The discount campaign, which relies on the already-established opportunity for bulk purchases and on-selling, will be managed by former “Choice” staff member Christopher Zinn.

One Big Switch will earn a commission from electricity providers for each customer taking up a supply offer.

This, I feel, is a quite a straw in the wind for both the media and for energy suppliers.

Among the toughest hurdles the industry faces is getting politicians out of the way over retail prices.

Even though the means of competition is available, State governments (other than Victoria) are running scared from cost-reflective pricing and lifting retail regulation because they fear a voter backlash.

If campaigns such as this take off – and one imagines it won’t be long before News Ltd and One Big Switch find competitors in the space – and many more consumers become comfortable with chasing the best prices, the heat won’t evaporate from the power debate – because prices will continue to rise – but politicians will be freed to ask: “Well, are you taking advantage of the discount opportunities?” as they now can with petrol.

Zinn makes an interesting point in the publicity in today’s newspapers, locally for me the “Daily Telegraph.”

He says: “People are disconnected from their electricity bills and, as prices go up, they feel powerless to do anything.

“People will drive around to find the cheapest petrol, but they don’t do that with electricity.

“What we want to do is re-connect people with their bills.”

Zinn asks why should households spend perhaps 10 per cent extra for energy when they can get the electrons with an easy discount?

An an example, let’s take The Hills area where I live in outer Sydney.

This sprawling, ever-growing bit of suburbia has one of the largest average household power demand levels in the country, partly because the plateau between the city and the Blue Mountains is prone to hot, humid summer weather and biting cold in winter, partly because access to gas for cooking and heating is not great here.

An average household in The Hills uses 10,400 kilowatt hours of power annually, for which the bill in the financial year now ending was $2,574 and in 2012-13 will be $2,878, largely because of a $242 impact of the carbon price.

(This is a third higher than the NSW residential consumption average and double what your average Victorian home consumes because that State has a much larger uptake of gas.)

One Big Switch, through the interactive information on the “Daily Telegraph” website, claims people in The Hills taking up its discount proposition can cut their bills by $317 in the new financial year.

The business is setting out to win 25,000 household and small business customers around the country “to unlock group discounts.”

The scheme will work through customers registering with a website (www.bigelectricityswitch.com.au) by 15 July.

As Zinn acknowledges, this idea has not been tried before in Australia – at least not at this level.

He and News Ltd are reckoning on public concern with power prices – which have been rising more than four times faster on the east coast than average weekly earnings in recent years – driving the project, delivering income for his firm and kudos for the tabloids, who will talk up every development.

How long do you suppose will it take for some other business and the Fairfax papers, going tabloid themselves in 2013, or a television chain to buy in to the game?

From a power supply perspective, this is a good thing, I suggest, and a still better one if it enables the industry to finally push State politicians over the line to retail deregulation.

Down this road lies the opportunity to introduce across the east coast smart meters and time-of-use charges aimed at flattening peak demand – and by extension curbing further high network charges.

I may just need to hire help so I can keep up with the speed and complexity of this shifting environment…………..

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