02 May 2018
Spot Pricing, Wholesale Market, Fixed Rates, Daily Charges, Low User, Standard User, Smart Meter, Not quite so Smart Meter… we’ve heard it all, and more. But what do these terms really mean and more importantly how do they affect our power bill?
Well, let’s start at the beginning and find out about that Spot Price that everyone is talking about.
In a nutshell, the Spot Price of power is the price that all power retailers pay to buy power from the Wholesale Market
This price changes every 30 minutes, which means that the profit (or loss) a standard power company makes from their customers also changes every 30 minutes. If you’re lucky enough to be one of our customers at Power Direct, then you know that the price you pay for power is reflective of actual spot price. This means that you have the advantage of using power when the Spot Price is low and turning off unnecessary appliances when it’s high – yes savings!
Knowing that the Spot Price of power changes every 30 minutes, let’s find out what some of the main influencing factors are:
Demand – The Wholesale Market is like an ongoing bargaining war between the power generators and the power retailers. With the retailers bargaining for power every 30 minutes. This means that when the demand for power is high the Spot Price increases as retailers have no choice but to pay the going cost. When demand is low and there is less interest the Spot Price can plummet.
Generation – The type of power generation being used can heavily affect the Spot Price of power. Renewable generation through hydro or wind is the cheapest source of electricity. If the demand for power is really high and New Zealand cannot produce enough electricity this way then backup generators using coal and gas are used. These generators are way more expensive and thus push up the Spot Price.
Weather – Not only can the weather increase the demand on power (with everyone blasting their heaters to survive the cold, or pumping cold air to survive the heat) but it can also affect power generation. If we experience a really dry winter and don’t have enough rain to fill our hydro dams we may need to lean on the ‘other’ generation options like coal and gas. This can also take place if there isn’t enough wind to power our wind generators – thank goodness for Windy Wellington!
Now that we know a little more about what can affect our ever important Spot Price, what can our Power Direct customers do to make sure they are making the most of low Spot Prices?
- Use power when demand is low – as we know that demand directly affects your Spot Price for power, maximise your savings by using big appliances in off peak times. This is generally while the bulk of the country are out in the middle of the day or overnight.
- Keep an eye on the Spot Price, you can use the up to date infographic in the My Account area on our website to see the Spot Price all day every day.
- Indulge in the odd rain dance – get out there and show your appreciation to renewable energy by celebrating those rainy days.
- Stay tuned for our phone app - that’s right, we’re getting ready to release our own phone power app to help you keep track of the Spot Price whenever and wherever!
Not already on board with Power Direct, but ready to give Spot Pricing a go? Make the switch here! With no fixed term contracts there are no risks in checking out our pricing model today. You can also check out some of our earlier blogs for information on Wholesale power and Low vs Standard User plans.
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