Why is our electricity so expensive? (31 Jul, 2017)

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Why is our electricity so expensive? (31 Jul, 2017)

Postby aardvark_admin » Mon Jul 31, 2017 8:41 am

This column is archived at: http://aardvark.co.nz/daily/2017/0731.shtml

Given that our dams have been paid for many times over and that our renewable generation sources have no cost of fuel, why is it that other countries which burn coal, oil and uranium have lower (sometimes *much* lower) electricity prices than New Zealand?

Is it simply that this is a great way to levy yet another hidden tax on the citizens and businesses of this country?

Is it bad management?

Is it greed?

Just what the hell is it?

And how will government replace this lost revenue as people transition from "on grid" to "off grid" as will inevitably happen due to advances in energy capture and storage technologies?
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby phill » Mon Jul 31, 2017 9:37 am

perhaps we should come up with another term for new zealands own form of cronyism

* The Daisy Chain *

*definition ... "where the corrupt group of ex pollies and friends running our soe's all follow each other intimately closely and push the gravy around the circle"

we need to open up to the public how much the " executive party " are being paid to run the incredibly simple to run soe's ( including the extras )
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby Muscular Jam » Mon Jul 31, 2017 9:47 am

Muscular Jam
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby granada29 » Mon Jul 31, 2017 12:11 pm

We used to have a central generation/transmission system run by the NZED. With the myriad of electricity companies that we have now there must be huge duplication of resources in all areas (except operations) with each company running its own payroll, marketing and engineering.

Coupled with that we have a plethora of retail suppliers, all hiding behind their Theresa Gattung styled marketing (if we make it really complex no-one will understand and always stay on the most expensive plan).

In the good old days we had local authorities 'retailing' and maintaining the low voltage transmission systems. They were equity funded (as a opposed to debt funded) and WE owned what they operated and did NOT demand a profit. Today we have a complex setup of companies all trying to profit at our expense. The one time payout (which I never received because of moving house at the wrong time) was supposed to square it all away. What a joke!!!
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby joeseph » Mon Jul 31, 2017 12:23 pm

Woule it be cynical to suggest that all the managers & CEO's of these power companies are removing copious amounts of funds that would otherwise not have to be extracted (from the consumers) if the model were otherwise simplified. Their rational in demanding such pay levels, is self-fufilling in that it is related in some way to the overall funding levels.
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby Weasel » Mon Jul 31, 2017 1:00 pm

While the US has a lot of coal fired generation, its certainly not been expanded recently, and the bottom has fallen out of the coal market.

In Washington State we have the fortune of the Columbia river system with some 200 hydro dams in total, the largest is Grand Coulee Dam which is capable of 6800MW of generation if run at 100%. A large amount of the electricity generated in Washington is sent to California via HVDC. Overall Washington State accounts for half of the all hydro generation in the US.

Here in western Washington State, my last power bill was $114 for 1030kWh, $7.87 of it is the connection charge. There is a $7 energy exchange credit credited back (no idea what that is), $2.53 is state and city electricity tax. There is no "GST" or general sales tax applied to electricity. The first 600kWh is charged at exactly 10c/kWh, everything after that is 11.9c/kWh.

Its summer so half of that goes on air conditioning keeping the inside of a 1800sqft house at 22C with days averaging high 20s outside. 10kW/3 ton/36000 BTU unit with a forced air system that was built into the house when it was constructed in 1980. Winter when its below 0C out we lose the efficiency of the heat pump and fall back to electric heating via 15kW heating strips integrated into the air handler assembly with the heat pumps heat exchanger, over the 3 coldest months we peak at 3000kWh with bills in the high $200 to low $300 range.

Why so cheap? The hydro dams are mostly owned by the federal government, and they are not in the business of profiting from it, they sell the electricity via the federally owned Bonneville power administration at cost plus 11%, which in turn sells it to private and public retailers (thats my limited understanding of it). Everyone else generating electricity in Washington has to compete with this low base load price so it keeps them all "honest" I suppose. Retail market wise here, its not deregulated, you get no choice, also no advertising or cold calls, nor complicated pricing systems, just simple low cost electricity with out any of the nonsense I remember with retailers in NZ.
Last edited by Weasel on Mon Jul 31, 2017 1:29 pm, edited 7 times in total.
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby SeeNoEvil » Mon Jul 31, 2017 1:06 pm

You could start here: http://www.geoffbertram.com/fileadmin/p ... ity_01.pdf
or here: http://www.geoffbertram.com/fileadmin/p ... iction.pdf
or here: http://www.geoffbertram.com/fileadmin/p ... ebsite.pdf

Bertram has written a lot of other material - see here for more: http://www.geoffbertram.com/fileadmin/publications/

You might also enjoy this: http://www.stuff.co.nz/business/opinion ... in-the-air

The Commerce Commission are supposed to regulate the revenue (and price increases) allowed to the electricity distributors, especially under the provisions of Part 4 of the Commerce Act.

The Electricity Authority is supposed to "promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers". (My emphasis.)

I can tell you from extended and direct interaction with both of these outfits over the last six years (all the way up to their respective CEOs), that it's actually like a real life version of "Yes, Minister".

https://www.youtube.com/watch?v=85fx0LrSMsE (especially the last third)
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby roygbiv » Mon Jul 31, 2017 1:58 pm

I am buggered if I know why it is so expensive, I went to a presentation on NZ power industry a while back, some figures stood out that make NZ market quite unique
1. over 65% of power generated is renewable - which is good
2. on average electricity is 400km between generation and consumption - which is bad

The numbers may be different but the factors are still relevant. So, on point 2 there is Transpower which manages the national grid and state that no more than 10% of our bill goes to them. Then there is about 30 lines companies who do the local stuff up to our houses, not sure how much of a cut of our bill they get but imagine it may vary between localities, efficiencies . . . . and greed. Then there are the retailers and wholesale producers which is meant to be healthy competition. This is supposedly good for us where which can pick and choose according to our household consumption.
Maybe Mr. Weasel above lives in a (small) bubble of good honest competition up there in Trump Land.
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby Screw » Mon Jul 31, 2017 3:42 pm

Moot for me as I don't have a power bill. I asked my neighbour how much they pay and I am told it's 30c/KVA (unit) and $28.00/month line charges.

When the retail power was privatised, Max Bradford said that now power was going to be cheaper in 1997. Yeah right!
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Re: Why is our electricity so expensive? (31 Jul, 2017)

Postby SeeNoEvil » Mon Jul 31, 2017 4:51 pm

Here's the thing though Screw. Most people are completely confused by even quite basic aspects of electricity, the billing and invoicing, etc.

With all due respect, what you related about your neighbour illustrates this almost perfectly.

It won't be 30c/KVA - instead it would really be 30c/kWh. And secondly, the lines charges from the electricity distributor in the area generally do *not* correspond to the fixed charges on the retailers invoice. So I would also bet more or less anything that the $28.00/month for line charges is also not the correct interpretation of the invoice, and that your neighbour has incorrectly assumed the fixed daily charge from the retailer is actually the "lines charge". I see this happening very often, but it's wrong.

In most urban areas of NZ, the electricity distribution ("lines charges) accounts for something in the order of 40% of the total charges.
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