Dear NextGen Customer,

New Residential Price Plans, effective 1st March 2019

Firstly, thank you to all of you who have supported our growth over the past 3 years. Through your referrals and word of mouth, we have grown to now serve over 800 customers in the Top of the South.

NextGen Energy was established as a social enterprise company to create value from the power industry and return that value to schools and charities in the form of annual donations, and to our customers in the form of low prices.

We are pleased that even in the face of increased market volatility, increased competition and our own growth costs, we have been able to maintain our original prices to customers since we began in September 2016 and have consistently offered the best value in the regions we serve.

Market Changes

Despite that success to date, we, like all retailers, now need to review our pricing in the light of unprecedented market conditions over the past year. We had hoped that these market changes were temporary seasonal fluctuations from the generation side of the industry caused by low hydro levels, problems with gas and coal supply and more. However, it now appears that these changes are becoming permanent, with the net effect being that the price of wholesale electricity continues to increase over the months to come. Whilst this will financially benefit the big generators, it will negatively impact retail suppliers, and we believe that all power retailers, big or small, will have to increase their prices during 2019.

Wholesale (Spot) Market increases

The following graph shows the wholesale (spot) cost of the electricity that we purchase to supply to you, as an average across the past 3 years.

You will see that the average wholesale cost of power has doubled over the past 2 years, and that this increase has been absorbed by NextGen and not passed on to you, our customer.  The situation has worsened into 2019 already, with the average price so far this year increasing to $132/MWh and a forecast of no or little change.

In 2018 alone, NextGen subsidised our customers’ low power bills by more than $250,000.

Wholesale Market volatility

The next graph shows how the price of power has changed on a daily basis since the 1st January this year.

You will see that the cost of buying power for the whole month so far has typically been much higher than our selling price to you our customer. Whilst the big generating companies keep these prices high, smaller independent retailers like us will continue to be squeezed.

What does this mean for me and for my nominated school or charity?

In simple terms, NextGen is currently losing money on every unit of power that we sell. That means we are unable to donate money to the schools and charities we were established to support.

This is clearly a situation that cannot continue, and we are writing to inform you that unless we increase our prices to reflect the new changing cost of power, we will be unable to continue to raise funds for good causes in our community – our principal reason for operating.

When does the new pricing come into effect?

We have had the situation under review since last Spring and have purposely delayed adjusting prices until after Christmas, and to time their effect when our customers are using the least amount of electricity.

The new price plans will be effective from 1st March 2019 and are shown on our website at the following links, Nelson, Tasman, Marlborough.

These prices will be used on the 4th April billing date for March usage. We believe that these new prices still represent the best value for money, with no minimum term contracts and no exit fees. We hope that you will continue to support us. If the market returns to ‘normal’ levels of pricing, we will review our options to lower prices.

What else is NextGen doing?

Exposure to the spot market is typically a major component of how most, if not all, power companies price their plans to customers. To avoid the volatility and fix prices long term, NextGen is currently rolling out plans to be able to generate its own power from large-scale solar farms during 2019. Resource consents are currently being reviewed on the first solar farms that will be built in Tasman. We plan to construct farms in Nelson and Marlborough towards the end of this year, or early next year.

Will you be able to reduce prices, or fix my prices long-term?

Yes. Once the solar farms are built and operational (hopefully by mid-year), we will be able to offer fixed rate price plans for 5, 10 and 20-years – great deals that will not be able to be matched by other retailers.

I already have solar and/or battery systems from NextGen. Is my price increasing too?

No. If you currently have technology solutions from NextGen Energy then your price is already fixed for 10 or 20 years, dependent on your plan.

What are the technology alternatives to continually increasing prices year on year?

Long-term fixed-price power options remain available from NextGen:

  • our offsite solar365 program can reduce your monthly bill by as much as 100%
  • our battery energy storage systems provide flat-rate bills as low as $9 per month,

Please see our website or contact us and we will be pleased to provide you with details and costs.

Thank you for your understanding and for partnering with us in serving our community.

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