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Powerclub Review

Powerclub review
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Estimated reading time: 6 minutes

Powerclub Review – A new electricity proposition

We review Powerclub which was launched in 2019 with a novel approach to selling electricity. It has only one direct competitor, Amber Electric, which we also reviewed recently. We show that there are cheaper options than Powerclub, without the risks entailed in being exposed to the highly volatile wholesale market.

Electricity providers have traditionally had 2 main jobs:

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.

Powerclub claims – Review

Powerclub claims “Same energy – better price” which they say they can deliver by being “Customer Owned”. While Powerclub have some extravagant claims, at least their claims don’t have over the top nature of the claims made by Amber Electric. They do claim to be member owned, and ‘not for profit’.

It sounds good and very different from the others, but let’s dig deeper

Powerclub claim to be ‘not for profit’ and member owned but they admit that a licence fee is paid to Power Club Investments Pty Ltd which essentially shifts profits to that company.

Are Powerclub Rates Cheaper?

The claim to be cheaper relies on

What does exposure to the spot market mean for customers?

Is the delivered price Cheaper?

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).

The other component of prices are the retailer charges. As shown in the home customer example drawn for the Powerclub website, the Powerclub charges amount to $228 p.a. well in excess of the 5% retail margin ($73) that they cite on their website. Best practice costs of conventional electricity retailing are $70 p.a. However, Powerclub only bill customers and don’t have the costs of managing energy price risks in the wholesale market as other suppliers do. Their best practice costs would therefore be lower, say $50-60 p.a. Their remaining margin is around $166 p.a. It’s not consistent with being low cost!

In addition the average home customer will need to lodge $400 with Powerclub as discussed below.

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 Powerclub are cheaper.

Review of Powerclub rates compared with Amber Electric

$ p.a.PowerclubAmber Electric
Retail service fee$221$180
Carbon neutral charges$7$11
Total$228$191
Based on Powerclub example shown for United Energy. Home customer using 15kWh/day. Amber Electric also provide insurance at a cost of $55 p.a.

Review Green Credentials of Powerclub

The claim to be greener relies on

Their claim to be ‘greener’ is dubious at best. The best and really the only way to be greener is to subscribe for GreenPower, which adds only a small cost, and supports the adding of new renewable energy to the grid. Powerclub do not offer GreenPower.

We therefore reject the claim that Powerclub are greener.

Price protection with Powerclub

Powerclub do not offer any price insurance. The customer instead pays into a Powerbank. The initial Powerbank is set at $40 per 1000 kWh of usage. For our example customer this amounts to $218 charged upfront. Over time this doubles to $436. Customers are charged an apparently ‘fixed’ price which is then adjusted to either top up or draw down their Powerbank.

  1. How do you feel about outlaying around $400 to the Powerbank?
  2. What if there is a bad month or two, say 10 times the normal price? Sound ridiculous? It’s not. You would just have to pay up for that month, and the next if it repeated. There is no practical limit on what you might pay in a month.

Conclusion

Our review of Powerclub showed there are very limited situations where it could be a good option.

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