Powershopping ... it's nothing to do with high fashion. It's a new way to buy electricity.

No matter which power company we use, we still buy electricity pretty much the same way our grandparents did. Every month the power bill arrives, listing the amount of power we've either used or have been estimated as using. We then pay the bill.

But now there's a new way to buy electricity. Powershop (a wholly owned subsidiary of Meridian Energy) has set up an online shop that lets you buy blocks of electricity from different suppliers - possibly saving you money.

How does it work?

Think about the way you buy milk. When you're about to run out you go to the supermarket or dairy where there'll be several products in different sizes, flavours and fat content. You choose the product that suits you best at the time. Next time a product may be on special, so you choose that one.

Powershop uses the same principle. When you need power, you go online and choose a block of power from competing companies. Maybe green is your thing - so you choose a "green" power product. Or maybe you just want the lowest price.

Keeping connected
You can buy enough to last from a few days up to a couple of months - it's your choice. If you "run out" of power you won't be disconnected: Powershop emails or texts you in time for you to go online and buy more. If you don't do this, Powershop will buy your favourite product on your behalf.

How does Powershop know how much electricity you've used? By reading your meter every month (a smart meter isn't needed for this). You can do this, too: you can read the meter at any time and then enter the numbers into your online Powershop account. For instance, you might want to make sure your account is up to date after you've been on holiday.

Paying for it
You can pay for your electricity online in advance, as-you-go, or in arrears using direct credit, credit card or internet banking.

Some products have limits on how much power you can buy at any one time - and every block of power you buy has an expiry date (usually a couple of months ahead). Some products (known as powerpacks) have a defined date range that, for example, will allow you to buy some power for winter during the previous summer.

Powershop suggests using these products to manage your winter power costs, but recommends you don't buy more than two-thirds of your usage in advance to avoid over buying and having products expire.

If you buy too much, the power you bought "expires" and you lose your money. Powershop says it has to have expiry dates on the blocks of power so that the prices it offers can be as low as possible - if you could buy up many months ahead then suppliers would have to factor in possible changes to the wholesale prices they pay.

We say

• We welcome any initiatives to increase retail power competition. It's too early to tell whether you'll save money by changing to Powershop.
  
  
• We think you're more likely to save using Powershop if you don't use electricity for heating. That's because Powershop prices are likely to be higher during winter. If you consume a lot of electricity in winter, you may not gain much - if anything at all.
  
  
• A Consumer staffer will be changing to Powershop and we'll be monitoring how it works and what he ends up paying (compared with what he would have paid with his previous supplier). We'll report on progress.

More information

• Powershop: www.powershop.co.nz

More from consumer.org.nz

• Powerswitch - work out which power company and pricing plan is best for you.

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