Contact Energy - CEN Chart

[DarkRed]

http://business.scoop.co.nz/2011/07/...opSrc=business

The customer switching campaign by the EA has been a huge success with 43000+ switch requests. Unfortunately Contact has lost 7679 customers in June alone.
Hopefully these are low use customers.

Average household annual power bill of $1500 x 7679 customers = $11.5 mil potential loss of revenue
Revenue in 2010 = $2,143 Mil
loss of customers in June alone = 0.54% loss in potential revenue

[Arbitrage]

Now they have got the share price down, when will Origin make its move?

[troyvdh]

Spot on Arb....what is of concern is that thus far (to the best of my recollection) there have been no announcements of shareholdings increasing/decreasing.
Is there a method(s) that could be employed by Origin to "mask" their 3rd ? 4 th ? assault on CEN.

I have in the past few weeks attempted to personally converse with someone from CEN as to why currently there retail prices are (for at me at least with three accounts) are about 2o % more than say Genesis and why the SP is at an all time low on good volume.
Its my experience that if a company is so reluctant to talk - reply to e mails ...something is afoot.
I have sent 3 e mails .....nil response.

It has been suggested that CEN are reducing there exposure to retail customers-hence there pricing.

What would be trully galling (for me at least) is I spend considerable time around Alex/Lake Dunstan and would really hate the thought that those mongrel aussies stole the thing from us.

...I wonder what price they will pitch at....550.....570.....630......

[CJ]

It has been suggested that CEN are reducing there exposure to retail customers-hence there pricing.

I think they are on record as saying they think other power co's are offer low prices to get customers and they wont compete in a race to the bottom.

It will stabilise once the current campaign ends and they will get some back (slowly) as other firms push their prices up in the next cycle. I am not to concerned about them losing 2% of customers who are probably small and probably tend to jump more often than the other 98%.

[gonzo56]

Rise in OBV. What do ya reckon? Will it stay above $5.40 from here on, or have a small correction before falling further?

[Steve]

Rise in OBV. What do ya reckon? Will it stay above $5.40 from here on, or have a small correction before falling further?

Possibly could creep back up to 560 before hitting some decent resistance?

[macduffy]

It will stabilise once the current campaign ends and they will get some back (slowly) as other firms push their prices up in the next cycle. I am not to concerned about them losing 2% of customers who are probably small and probably tend to jump more often than the other 98%.

It seems that CEN is concerned about the loss of retail customers.

Discount for "on-line, on time" payment has been increased from 12% to 22%.

[fish]

It seems that CEN is concerned about the loss of retail customers.

Discount for "on-line, on time" payment has been increased from 12% to 22%.

Seems they are gaining lots of high value customers. I changed to contact today-very easy process.Was told that this is their aim-they want lots of high user clients that pay their bills.Furthermore they have had a tremendous response.
Thinking about this later it means that every new customer means they can convert water that is being spilled over dams into pure profit .

[fish]

The 22% discount seems like a clever tactic to me. It's going to attract and retain the more mobile, price-sensitive customers without dropping their price to the less price-sensitive, less mobile customers. Once this competitive phase is over, they can ditch the discount without putting prices up.

This tactic is so brilliant . Please correct me if I make any wrong assumptions .
Its been a wet winter so power prices are relatively low and contact is probably spilling water and losing customers whilst doing so as cheap prices means opportunistic newcomers with no generation assets attract customers with low temporary prices .
Contact undercuts this by attracting new good payers with a 22%discount -which makes their prices lower than anywhere else yet still generates income .
My guess is they will continue the discount until we have a dry year and power prices are up .
They will start gaining the cream of customers .
More customers will require more generated power -they probably have a lot of spare generation power going to waste at the present moment so more customers equates with much increased profits as costs remain the same .
When contact have enough customers to use all their generated power they may reduce the discount entirely at their discretion .
With more geothermal coming on line they will have end users who will go to contact for the discount with prompt payment .Geothermal is the cheapest as well as being constant source of power.
If they have a dry year they can reduce the discount accordingly-power prices will be up and newcomers will not be able to match their prices.
During this time with one of the higheast charging companies they can shed their poor payers which are costly to maintain .
We are in a cold spell-contact customers such as me can increase use of heatpumps-i have 5 domestic and countless commercial pumps in my business,whilst knowing i am getting cheap electricity through the big discount
.

[macduffy]

The only proviso I would add is that CEN will still be constrained by competition in the degree to which they can reduce the discount. That won't be entirely at their discretion now that consumers are becoming used to shopping around for their electricity. CEN will be well aware of that from their recent heavy losses and as prices increase, consumers will become ever more prone to switch.