When the hydrolakes are low and demand is high in cold weather, power prices soar.

Flick customers have paid about $56 more so far this winter than customers on traditional power retailers' models, the company says.

Flick passes on wholesale prices to its customers, plus a margin. These spot prices move according to supply and demand. When hydrolakes are full and demand is low, spot prices are cheap.

But during periods where there is less rain in the lakes, and more demand, prices jump substantially.

SUPPLIED Steve O'Connor says Flick is doing what it can to help customers through a period of higher prices.

New Zealand is currently in such conditions: For the first time since 2008, inflows of water into South Island storage lakes are well below average.



In the North Island, Genesis Energy is using its coal stockpiles, running its Huntly power station units on a 60/40 combination of coal and natural gas.

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Flick chief executive Steve O'Connor said in the week of July 10,spot prices had averaged 21c per kWh, the worst sustained prices since Flick started three years ago. In early June, they were about 11c, on average.

"Sustained events like this are very rare and even though we've had a few big spikes in the past, never higher prices that have lasted so long," he said.

"However, with last week's wet weather the average spot price came down about 12cents/kWh, and this week prices have dropped again to 10cents/kWh.

"With more rain and snow forecast down south and hydro storage increasing, back up at 65 per cent of average, from a low of 59 per cent, we believe prices are starting to turn a corner."

He said the higher bills had been hard on customers.

"On the whole they have been really loyal to the model, knowing they are better off [in the] long run. We are doing everything we said we would when customers, commentators and the regulator asked us how we would support customers in [a] dry winter.

"We are educating them about the situation, communicating openly and honestly, providing tools to help them manage their costs, and making it easy for them to leave."

More customers had left, he said, a combination of those who would come back once price conditions settled and those who decided the model did not work for them.

"On average customers have paid $56 more with Flick this dry winter than they would have with their old retailer. When you compare that to about $500 average savings in 2016 alone, the model still makes sense for consumers.

"So, we've been the victims of our own success in some ways. Prior to dry winter setting in, we'd delivered 102 weeks of consecutive savings so Flicksters had got used to very low bills. As their bills have lifted we've had to help them understand that they are still better off in the long run."

Sue Chetwin, chief executive of Consumer NZ, said Flick had had a "hectic" time dealing with customers.

"Most of their customers aren't used to increased prices as they have had years of the lakes being full and competitive wholesale prices. As you can see from the weather, the lakes will be filling. Other spot prices retailers will be doing it tough too. I suspect it will be short-term."

Paua to the People also offers the spot-price model.