The energy company helping you to save money: The Flick Electric Co Story
The month was beginning, and with it the NZ Comedy Festival! Finally some world class, live entertainment every night of the week to choose from. What caught my eye initially wasn't the lineup of New Zealand’s greatest comedians, but the sponsor… Flick Electric. Who and what was that? An electricity company? The major sponsor of a comedy festival? Now that's a bit different.
And different is what Flick Electric is. This company certainly isn't following the old conventional rule book of the electricity industry. And let's be honest, no one really understands it either; there's no transparency and all we get is a bill at the end of the month with no explanation of why it's so damn large and why it keeps going up. Finally, Kiwis have a choice and an opportunity. Instead of being constantly pissed off with your electricity bill, you now have the chance to understand why it costs what it does. But it doesn't just stop there - you can save a considerable amount compared to other retailers and contribute towards a more sustainable future for NZ at the same time.
A correlation completely unheard of when we think of electricity. I can save AND help towards decreasing NZ’s level of Co2 emissions? “How in the world do they achieve this?!” was the first question running through my head. I sat down with co-founder Steve O’Connor to find out exactly that.
B: So how did you get into this? What's the drive behind Flick? S: The company was founded by 6 of us who had worked in the New Zealand energy industry and we all felt there was a much better way of doing things for consumers. We felt that with smartphones being deployed in New Zealand there was better technology to tackle many of the issues consumers face, where the use of digital platforms could offer more transparency and choice than they previously had in terms of electricity usage.
The wider context of the energy industry today is not clear, or as efficient as it could be. It's been that political hot potato where Labour and the Greens certainly pushed and asked, Are there better ways? Do we need to think about whether it is appropriately regulated? Are consumers really getting a fair deal? So the creation of Flick was really about asking those questions, working to solve the problems and create solutions.
B: What are your thoughts on how efficient the New Zealand energy system is?
S: We are actually really good in NZ with some things: we have fantastic engineers who are good at building the system. But the bit that's never really been focused on is delivery to the consumer, so we focus on that space. We are very mindful that the large guys who retail electricity are very good on the generation side but have not focused on the customer, what the customer needs or what their problems are.
From the consumers point of view that's kind of weird because you could almost argue that electricity is one of the most valuable products we consume. Without it we wouldn't be able to heat our home, see at night, cook our food and charge all these devices that keep us in contact and entertained. We’d be back to the dark ages without it. Fundamentally it’s one of the most important things we have. This has resulted in the consumer not being engaged with the product. They don't put a value on it: people hate it when they get their bill. No one knows where the energy has come from, or whether the energy they are consuming at that time is scarce or abundant, and no one really knows what price they are paying. We are completely disengaged with the most valuable product we use.
At Flick we are trying to get the customer to engage with the product.
For example, do you know how much it costs for energy usage in your home every day?
B: No I have no idea…
S: That’s the problem I’m talking about. On average it is less than five dollars, to cook food, use lights, shower, heat your room. Five dollars to do all of those things you do in your home in a day.. It costs you less than a cup of coffee.
Our model is fundamentally different in a few ways. Firstly, we make it very transparent in terms of who you are paying for what, so for the first time customers can understand value. Our customers pay the exact cost of generation with no markup. They pay the exact cost of moving it around the country and getting it to their door. We then charge them entirely separately for being the retailer, because that is actually our function.
All other retailers tend to bundle that up so they absorb the costs they receive from other people in the industry that help make it all work. They charge you a number, and no one can understand why that number is what it is and why it keeps going up. With Flick, if costs fall the customer gets access to that immediate benefit from buying at the spot price.
The model is based on complete transparency, where it’s clear who's charging what and where the margins lie.
The second bit is that when the customer has access to this, the industry tries to work more efficiently. It does this through price signals to scarcity or abundance. What we are doing is allowing for the first time consumers to see and understand those price signals.
It's the same analogy of walking into a food market and at certain times of the year paying more for strawberries. People understand that they are more expensive because they’re out of season in NZ and they are probably being imported, compared to in-season when they are produced down the road and are as a result, a lot cheaper. We are trying to do the same thing.
When a customer flicks the switch, we want them to know how that energy was generated and whether it’s abundant or scarce at the time, which is well reflected in the price. And if they are struggling to pay their bill, they finally get a choice of what they pay for regarding the different things in their home. We're not suggesting they go without heating in the winter for example, but we are suggesting that for some discretionary things such as using the dishwasher, washing machine and dryer, they move usage of those things around depending on the price signals.
For example, in Wellington you might pay a flat rate of around 25 cents per unit with large retailers, but a lot of our customers are paying only 8 cents. This is because they are educated in when they should be turning things off or waiting to use others. It’s resulted in their bill being about a 3rd of the price!
It's about getting consumers to inadvertently care more for sustainability elements, like the type of electricity generation that's filling the pipes at any one time. We know they care about price, and this simply reflects scarcity and abundance. They care about how much they are paying and if it is affordable to them, and now they can use energy differently not just for their own benefit, but for the benefit of the country as a whole.
So it’s about creating a people movement behind renewables? How does Flick make that happen exactly?
We simply expose kiwis on a nationwide level to how sustainable the electricity generated at that point in time is. The concept around that is getting them to think more about energy type and the co2 emissions produced as a result of using that generation. For our customers it is about conscious consumption.
If you take it back to the analogy of buying food, you pay more for organic produce. It’s better for you and the environment but you pay a premium for that. The interesting thing is that once you become a Flick customer, there is a lovely relationship between cheaper prices and more sustainable energy. The reason for this is we have a really nice system called ‘base load’ in NZ. This is ‘base generation’ which is always running, so when it's night and the wind turbines are turning at Makara in Wellington, they don't turn them off. So when demand is low it drives prices down because they need to put that renewable energy somewhere. So there’s a cheaper price when the base load is sustainable and there's less demand, which also correlates to less emissions.
On the other side, a higher price is serviced by peak generation which tends to be coal or gas, which obviously has much higher emissions. So again, there is a really lovely relationship between acting sustainably and benefiting financially, which you don't often get.
I’ve seen that you teamed up with the NZ Comedy Festival this year. Can you tell me about some of the communication strategies that Flick uses to help educate society?
We tend to use a more digital approach but recently jumped on board with the Comedy Fest. You can go online, watch the comedians and see that we’ve used some of the talent in the festival to talk about the electricity industry and some of the crazy things that go on. They do take the piss out of the industry, which of course we are a part of, but we simply said to the comedians “there are some stupid things that go on that are not the best for consumers; here are some examples that you might want to use to make people laugh”.
It's just a different way of engaging with consumers and getting them to think differently about the electricity industry. What we are trying to do is use digital tools, but also associations such as the Comedy Fest to raise awareness about the industry and certainly about Flick and what we are doing. It’s just about getting them to stop and think.
Right now people just think ‘once a month I’ll get a bill’, but then it's a huge bill with no explanation as to why. It also seems to go up all the time and people have no choice. They need the electricity, they can’t exactly take themselves off the grid. So people are either completely disengaged or permanently pissed off. Our partnership with the Comedy Festival has created a broader platform for getting people thinking about the electricity industry and our consumption habits.
The southland smelter uses 12% of NZ’s renewable energy - is it efficient for the country that we are using a valuable slice of our renewable energy on an energy intensive commodity that is effectively coming down in price?
Yes, it uses a lot of NZ’s energy to produce aluminium. We think it would be quite good for NZ if that energy was passed back to the network and to the customer where it would bring prices down. On the spot market it would obviously be a large chunk of carbon emission free energy that would likely take out a significant amount of dirty, more expensive energy generation that we still have on the market. From the perspective of it helping NZ towards greater sustainable energy, it would certainly do that and would be very beneficial for prices.
What do you think of NZs progress towards 100% renewable energy?
I think NZ is doing pretty well already, but we hope that the app that we’ve got will drive consumers to be more conscious. Effectively what you chose to consume becomes a vote. It's a move on from the green wash that's out there right now, the assumption that if you are aligned with retailers who are also generating the clean and green stuff, you are actually consuming green electrons, and that is clearly not the case. You cannot choose which types of electricity electrons you consume. We just need to get to the next level where consumers are more aware and realise that we are all consuming elements of electricity that are dirty.
A lot of it lies in educating our customers; ultimately the areas we choose to spend our money will develop the type of world we live in, so it's about driving the conscious consumer. Anyone can use the app and see how energy is being produced in NZ, you don't have to be with Flick to have the app. We want to help educate everyone. But in becoming a customer it's that chance to start mapping price with carbon emissions as well. When prices are lower, carbon emissions tend to be lower and when prices are high emissions tend to be high. It's a lovely interplay that we hope will help more consumers recognise that by joining Flick they can benefit both themselves and NZ.