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Amber Electric Review

Amber Electric Review
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Amber Electric Review – A new electricity proposition

We review Amber Electric which was founded in 2017 with a novel approach to selling electricity. It has only one direct competitor, PowerClub.

Electricity providers have traditionally had 2 main jobs:

Amber Electric have largely, but not entirely, decided not to undertake the second job. PowerClub only performs the first job. Exposure to the spot market means you can get highly variable bills as we explain below.

They claim to sell all the services they acquire on the customer’s behalf at cost, and just charge a monthly fee to cover their costs and profit.

Amber Electric claims – Review

Amber claims to make electricity ‘cheaper and greener’

Are Amber Cheaper?

The claim to be cheaper relies on being able to access wholesale prices directly and using power at times when the spot market is cheaper and less when it’s more expensive.

The cheapest Energy Companies essentially pass through the wholesale contract price to customers at any point in time (as distinct from the spot) with a minimal premium. The cost premium for avoiding the spot risk is minimal (estimated at 0.4c/kWh).

As a result, customers are generally better off getting the cheapest fixed price and moving suppliers when there is a cheaper price. Find out how do that here.

We therefore reject the claim that Amber Electric are cheaper.

Are Amber Greener?

The claim to be greener relies on

Their claim to be ‘greener’ is dubious at best. Their claim to offer “the fastest way to shift Australia to 100% renewables” is absolutely false. The fastest way is to subscribe for GreenPower, which costs only minimally more than carbon offsets and supports the adding of new renewable energy to the grid.

What does exposure to the spot market mean for customers?

Review of price protection of Amber Electric. How good is it?

On the bills that we have seen, Amber charge 0.5c/kWh or 1 c/kWh for price protection. They publish the maximum prices that you will pay for each distribution area. These prices correspond to the Default Market Offer in NSW, QLD and SA and the Victorian Default Offer in Vic. It’s a single rate plan for homes. It’s unclear how it applies to time of use or to demand tariffs or to business customers.

It appears that after a year, if you have paid more than the published price cap, Amber Electric will give you a credit for the difference.

It sounds good, till you think about it.

  1. What if there is a bad month or two, say 10 times the Default Offer? Sound ridiculous? It’s not. You would just have to pay up for that month, and the next if it repeated. If you leave you would not get the benefit of price protection. There is no practical limit on what you might pay in a month.
  2. At the end of a year, you get a credit, and then you have to wait till the credit is used up to leave. Price protection? Or enforced loyalty?

Annual price protection is not worthless, but it’s a poor way to manage extreme price events. Some form of price protection that settles monthly is needed, and the credit should be applied before you pay the bill.

Conclusion

In some exceptional cases and with some changes, Amber could possibly be a good option.

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