Consumers have an increasing range of choices when it comes to signing up for a new electricity contract, and as new companies continue to enter the market a range of additional offers, including conditional discount offers, are being incorporated into plans.
The electricity market is evolving, with large and small retailers alike competing for customers, with a host of smaller players setting out to make their presence felt in various regions throughout the country.
The Electricity Authority’s 2016/17 Annual Report shows that five new retailers entered the NZ market during the 2016/17 financial year, with small-to-medium-sized retailers gaining 33,953 connections over the course of the year, for the first time lifting their share of connections to just over 10 per cent.
There is now more motivation for retailers to stand out in the market, and conditional discounts, complementing plans and services, can provide a point of difference.
Chances are that consumers considering changing retailers or looking to open a new account have come across these types of conditional discount offers, marketed as a part of plans. So, what exactly do these types of offers involve?
Prompt payment discounts
As opposed to discounts which are an in-built and automatic feature of an offer, such as an upfront discount when purchasing a service within a specified time frame, conditional discounts relate to a consumer receiving a discount when they do something agreed upon with their retailer under their contract.
Many NZ electricity retailers offer prompt payment discounts as part of their plans, delivering customers a percentage discount off their bill when they pay on time, sometimes with an incentive to make payment via direct debit.
Energy retailer Mercury is one such retailer offering a prompt payment discount, providing customers a 10 per cent discount when they pay their bill on time and in full, while customers who sign up to receive their bill online and pay by direct debit receive an additional 2 per cent discount.
Nova Energy is another retailer offering a prompt payment discount, providing residential customers who pay their bill on time and in full a 15 per cent discount, applying to residential electricity and natural gas.
It is important to keep in mind that retailers not offering a prompt payment discount are not necessarily more expensive. Pulse Energy, for instance, states that it does not offer a prompt payment discount, stating it offers the best price it can from the start.
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More than one service discount
Energy retailers that offer multiple services may provide consumers additional discounts upon the condition that they sign up for more than one service. These sorts of offers can benefit consumers via additional discount rates, while retailers benefit by signing up customers for additional services.
Genesis Energy, for instance, offers a 10 per cent prompt payment discount, along with an additional 2 per cent “Dual Fuel” prompt payment discount for customers who are with the company for both electricity and gas (natural or bottled) at the same residential address.
For consumers in the market for multiple services, these sorts of offers may well be worth looking into, although it is certainly also worthwhile considering and comparing the value of competitors’ services on a standalone basis before signing up.
Are conditional discounts worth it?
There are a number of factors that need to be taken into account when considering what sort of value energy conditional discounts will deliver, and consumers should take the time to gain an understanding of what they are signing up for.
While the lure of a big percentage prompt payment discount may grab your attention, take the time to consider all aspects of the plan being offered. First and foremost ensure that the tariff is the most suitable one available in the market for your usage – if you are not on the right tariff, it may well negate any sort of conditional discount you will receive.
Indeed, it could well be that a retailer not offering a prompt payment discount can still provide greater value in the long term by virtue of offering a tariff more appropriate for your usage. Do your homework and compare the benefits of the various offers you are considering, referencing your past electricity usage in developing an understanding of what your future costs may be.
In considering this, also keep in mind which portion of your bill the prompt payment discount will apply to. How will charges potentially not covered by the discount, such as service fees, impact the make-up of your invoice?
Also, consider what will happen if you fail to meet your end of the bargain. For instance, what will the cost of your bill look like if you do not pay on time under a plan with a prompt payment discount, and how do these costs compare to the offers of other retailers, with or without conditional discounts incorporated into their plans?
Of course, it will not be your intention to fail to meet the conditions of an offer, but it is worthwhile being aware of what will happen if you don’t when considering the pros and cons of the various plans on offer.
What to keep in mind when weighing up conditional discount offers
Conditional discount offers make up just one aspect of an overall energy plan, and it is certainly worthwhile considering what is being offered by a retailer in its entirety, and actively comparing the offerings of different retailers.
This will range from the costs you will potentially incur under a tariff, to the flexibility of your contract, including taking into account how long you will potentially be locked into a contract, to the customer service offerings of a company, such as online and mobile account management and monitoring.
In considering conditional discount offers, also look beyond the percentage figure being offered and assess exactly what sort of value the discounts will deliver in the context of your electricity usage. It is always worthwhile reading the fine print, and if you have any questions make sure to approach the retailer before signing up for a service.