19/01/2015 - 13:12

Kleenheat fuels gas market battle

19/01/2015 - 13:12

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In just its second year in the tightly held retail gas market, Wesfarmers’ Kleenheat brand has stirred up intense competition among business customers.

In just its second year in the tightly held retail gas market, WesfarmersKleenheat brand has stirred up intense competition among business customers.

Most of the 8,600-plus Western Australian businesses that buy reticulated gas are customers of Alinta Energy, but Kleenheat last year grew its business customer base to 232, a 10-fold increase from 2013, its first year in the market.

According to the Economic Regulation Authority, Kleenheat’s market share gain mostly affected Synergy, which lost 62 customers, or 44 per cent, last year, while Alinta lost 73 (-0.9 per cent), and Esperance Gas Distribution Company dropped three (-8.3 per cent). The market grew by 74 customers to 8,626. Market share by volume was not available.

Synergy, which has provided gas to big businesses for more than a decade and is currently trying to entice smaller business customers, said its in-house analysis showed WA businesses could save up to $10,000 on their annual gas bills by switching to the government trading enterprise.

Its advertising goes further, offering businesses that spend between $6,800 to $40,000 per year on natural gas up to 25 per cent off if they switch to Synergy.

While standard tariff rates apply for businesses that use between 180 gigajoules (approximately $6,800 per year) and 1 terajoule (approximately $33,500 a year) of gas, retailers are able to provide discounts through product offerings.

Kleenheat offers a 10 per cent discount off the standard tariff for residential gas users by passing on savings by shifting the switching process online, sending bills via email and direct debiting.

However, its advertising to businesses doesn’t use ‘percentage-off’ slogans.

Instead, its marketing appears to leverage off experience from its more established gas supply services, as well as focusing on customer service and “providing energy solutions”. It claims to have business customers such as seafood restaurant Cicerello’s, Princi Smallgoods, and restaurant chain Miss Maud.

Kleenheat Gas general manager Mark Gadsby said gaining 164.2 per cent more residential customers and 1,060 per cent more business customers in 2014 compared with 2013 was encouraging, but the business was chasing much bigger growth.

“Numbers are not as strong as we’d like,” Mr Gadsby told Business News.

“We’d love to see more Western Australians make the switch.”

Dominant gas provider Alinta said its focus was on providing overall value when it came to keeping and attracting customers.

Alinta corporate services executive director Daniel McClelland said increased competition always presented a challenge, but it was successfully competing because of its experience and focus on value.

Alinta chief executive Jeff Dimery has previously spoken about the company’s support of competitive markets that increase competition, but also warned of the issues that come with it, including high rates of churn and difficulties in recouping unpaid bills.

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