Genesis Energy-owned gas retailer Frank Energy has announced it will cease supplying gas to customers starting March next year.
“As the supply of different fuels changes, Frank has chosen to focus on electricity only,” a spokesperson for Genesis Energy said.
“Removing gas and LPG from our product range also simplifies our ability to digitise customer service and ordering and reduces cost from our business. The dual fuel offering is not common among challenger retailers.”
“NZ’s natural gas supply is clearly in decline at present and with uncertainty around its long-term availability and price.”
Customers currently using gas or LPG from Frank will have the option to switch to Genesis Energy. Those who transition will be placed on an open plan at Genesis rates, allowing them to change providers without incurring penalties.
Consumer NZ head of Powerswitch Paul Fuge said nearly 46% of residential homes use gas, split between bottled and reticulated supply. However, recent price increases of approximately 15% have raised concerns among consumers and providers alike as companies strive to recover costs associated with maintaining an expensive gas network from a declining customer base.
He mentioned that individuals with gas connections might incur an additional $700 annually simply due to the gas service, which is a costly option for many these days.
“On average, about $1.90 a day to have a connection, and then you have to have the electricity connection as well, and it limits the number of options you have for supply because some retailers won’t supply you with gas unless you have electricity as well.”
Marketing expert Bodo Lang from Massey University, who is also a customer of Frank, said that individuals might respond negatively if they feel their options are being restricted.
“First, they are likely to want the item they cannot obtain even more. Second, alternative options become less appealing.”
“Third, consumers are likely to develop negative feelings towards the person or organisation they believe is restricting their choice.”
According to Lang, “Frank Energy did a number of things to minimise consumer reactance.”
“Firstly, they sent their notice many months ahead of when they would stop supplying gas. Secondly, they apologised and expressed empathy for how their decision might impact their customers. Third, they outlined the process clearly and encouraged consumers to use an online comparison tool developed by Consumer NZ, a credible and independent organisation, to find the energy retailer best suited to supply them with natural gas.”
For Lang, this serves as an excellent example of how businesses can mitigate consumer reactance and minimize the potential negative impact of unfavorable news.
A spokesperson for Frank said no fees will be collected when a customer disconnects from gas. Gas network companies may impose a disconnection fee if a gas user chooses to completely stop using gas and convert their appliances to electric. In such instances, an employee from the gas network company may need to visit the property to physically turn off the gas supply.
“Gas network companies, such as Vector, First Gas, and PowerCo, operate the pipes that take gas into people’s homes. Retailers just sell the gas that runs through the pipes. Frank is a retailer that has decided to no longer sell gas,” the spokesperson added.