13-05-2025
Gentailers increase dominance with $70m Flick Electric takeover
Analysis: Z Energy has sold its electricity retail arm and its customers to Meridian, in a $70m deal that will further consolidate the market dominance of the big gentailers. Flick Electric is expected to be shut down.
It's disappointing news for small business and residential and power consumers, less than a week after the Commerce Commission cleared Contact Energy's takeover of Manawa. Smaller power retailers warn of rising prices, and already fewer options to switch plans.
There are renewed calls for the Government to change the regulatory settings for the power market. If a player as big as Z Energy can't compete in the electricity market, they ask, then who can?
Octopus Energy chief operating officer Margaret Cooney calls today's news 'a bugger for consumers'; Electric Kiwi chief executive Huia Burt calls it 'a huge wake-up call'.
But if the adverse impact on power prices seems certain, the impact on the country's carbon footprint remains to be seen. Hydro power firm Meridian's power generation portfolio is all renewable (though it does hedge by buying fossil-fired electricity as a backstop).
The gentailers will argue they can leverage their bigger customer bases to build much-needed new renewables. And Z Energy says it can now focus its fuel transition efforts single-mindedly on home, business and forecourt EV charging.
Although Z Energy is a taniwha in the fuel business, it's a relative minnow snapping at the tail of the big fish in the electricity retail sector.
Its electricity retail business, Flick Electric, served 41,430 connections at the last count. With Flick's closure, they'll all transfer to Meridian. That will give Meridian 440,000 connections – that's 350,000 more than the next biggest player.
These Manawa and Flick acquisitions consolidate the power generation industry and the retail market in the hands of the same four big players. In total, the four big gentailers – Mercury, Genesis, Contact, and Meridian – will now top 2 million connections (87 percent market share).
All the challenger brands combined will provide just 300,000 connections.
Subject to regulatory conditions, Z has agreed to sell Flick, and Z's retail electricity assets such as its customer contracts and related hedge book. This doesn't include Z's forecourt EV chargers – so Z and Meridian have also agreed to explore a potential 'fuel and energy alliance'.
Meridian will also pay up to $5m for Flick staff to transition customers and systems to the new owner, over the next four to six months.
Z bought into Flick in 2017, then Z, in turn, was acquired by the market-listed Australian fuel giant Ampol in 2022. Ampol and Meridian announced the sale on the NZX and ASX on Tuesday morning.
Z Energy chief executive Lindis Jones says the company has decided to re-focus its investment where it can make the biggest impact. 'This includes helping make it easier for Kiwis to choose lower emissions transport solutions such as electric vehicles.'
He says the firm's focus is now on supporting its people through this period of change. 'Our teams across Flick and Z have done an excellent job in growing our retail electricity customer base,' he says. 'We feel confident our customers will be in safe hands.'
Meridian chief customer officer Lisa Hannifin says the acquisition builds on recent months when Meridian and its budget Powershop brand have grown connections faster than others.
She says the strategic fuel and energy partnership between Meridian and Ampol will be significant. This means Meridian can help Z Energy with its EV charging and decarbonisation process.
Energy minister Simon Watts and his associate minister, Shane Jones, have met electricity industry leaders and expressed their concerns about high power prices.
But at UK-owned Octopus, Cooney warns that the price competition and innovation of entrants such as Flick is what kept the big players honest and their prices in check.
'Unfortunately the wholesale market has been plagued by problems including persistent margin squeezes, immature contracting arrangements and refusals to supply,' she says. 'Further consolidation is an outcome of this but it's not a good result for consumers.'
If the Government wants to bring down electricity prices, she adds, it must ensure the settings support new entry and investment and end the 'kowtowing to incumbents'.
'Consumers are swallowing massive price increases at the moment which is ultimately the result of industry, regulatory and successive governments' inaction on obvious and well-documented problems with the market,' Cooney argues. 'These problems can be fixed – the question now is whether Watts and Jones are up for it.'
Huia Burt says Electric Kiwi is now one of the few independent electricity players left in the New Zealand energy market.
Huia Burt (left) and Margaret Cooney argue the Government must impose stronger competition settings to prevent the big four gentailers raising power prices. Photo composite: Newsroom
'We hope our politicians and regulators view this news as a huge wake-up call,' she says. 'For everyone who believes that a competitive electricity market can deliver an affordable, abundant energy future for New Zealand and our economy, this is another strong message to the Government: We need to change things now.'
She says challengers such as Flick and Electric Kiwi have driven innovation in the retail sector and put downward pressure on prices. 'Without them, basic economics would dictate that price will grow and service quality will drop.
'The competitive effect of challengers was clear last winter – when smaller players stopped taking on customers, gentailers withdrew their most competitive pricing plans, increasing prices by hundreds of dollars for anyone seeking out a new supplier.'
She described Z Energy exiting electricity retail as 'a vote of no confidence in our energy market and the Government's ability to deliver the meaningful reform needed to make it competitive'.
New Zealand's electricity market stands at a crossroads, she argues, and she's not convinced by the gentailers' arguments that big customer bases enable them to invest in renewables.
'We either start down the path of strong competition settings to encourage new investment and innovation, or we rely on the four big gentailers to look after us,' she says. 'The issue is, they have underinvested for years because it's in their interests to keep electricity supply tight, which drives prices, and profits, through the roof.'
In Australia, Ampol has also announced to the stock exchange that it's agreed to sell it retail power company there, Ampol Energy Retail, to energy retailer AGL Sales, for a nominal sum. It expects to receive pre-tax proceeds of approximately Aust$65m (NZ$70m) as a result of the two transactions on either side of the Tasman.
