Reward for saving power
It looks as though the Government is moving to reward power consumers around $10 per week for making savings on their power bill – to coincide with any dry year campaigns. It will make a difference to the back pocket of a lot of consumers. First they’ll get a few dollars just by using less power, and second they’ll get an incentive payment for making the saving.
The big companies have been saying for some time that they’ll shutdown generation IF they receive compensation for doing so. So, why not follow through and give the same deal to the end consumer? I think the dollars for savings policy for consumers has merit.
This measure also works as a signal to the power companies to manage their water assets more efficiently and effectively. Saying that, not all companies manage water. It’ll be interesting to see if a consumer who is with a Gentailer like Genesis will still get the same benefit given that Genesis don’t manage water assets.
Could media reports be correct that we’re going to see a realignment or redistribution of the water assets, or indeed generation across the board?
I guess the devil will be in the detail…
August 10th, 2009 at 10:26 am
When there was the campaign last year to save 15%, I found it easy to save that power (turning off lights, turning off appliances at the wall and leaving nothing on standby – computers, dishwasher, microwave, stove, tvs etc). However, it made no difference to our power bill. Any savings we made were eaten up by increases in line charges.
August 10th, 2009 at 10:27 am
“It will make a difference to the back pocket of a lot of consumers.”
This plan is utter tripe.
The government has no damn business using tax payer funds in so many nefarious ways. This, like so many other daft ideas relating to the use of taxpayer funds, is way outside the boundaries of prudent government.
God, I wish these do gooding socialists would vapourize themselves.
Whither the free market???
August 10th, 2009 at 10:29 am
Why is it the government’s responsibility to spend our taxes on rewarding people for doing something sensible? People get enough benefit by saving on their power consumption as it is. I do not want to pay for people to save, I’d rather pay less money in taxes so people who would not normally act with any sense of responsibility and accountability can be “convinced” to act smartly.
So please – reduce my tax burden and stop rewarding idiots for not taking care of themselves.
August 10th, 2009 at 10:31 am
What were you thinking when you wrote that David?!?
August 10th, 2009 at 10:45 am
Can someone please explain this weird scheme to me?
There is an effective way to achieve supply/demand equilibrium, its called MARKET.
It works best if there’s not too many false incentives. Govt should get the hell out of dodge instead of creating yet another doomed to failure, taxpayer funded, nonsense idea.
For a fresh example how this sort of stuff does NOT work, ring your local heat pump installer and ask a quote under that scheme, you’ll die laughing.
August 10th, 2009 at 10:48 am
reddy,
“The government has no damn business using tax payer funds in so many nefarious ways. This, like so many other daft ideas relating to the use of taxpayer funds, is way outside the boundaries of prudent government.”
Not sure you really understand this issue. (I know, I know – so what’s new – never stopped you posting before.)
The government won’t be paying the money. It’ll be the suppliers who are required to pay it to consumers in situations where they (the suppliers) have failed to properly hedge against shortages of supply. Because at the moment, where spot prices spike in a way that threatens the power companies’ bottom line, they run to the government and get it to declare an “emergency” and have the consumer alone carry the cost of shortage of supply (by voluntarily going without power). So this measure is designed to incentivise avoiding such a situation by encouraging the power companies to better hedge against shortage of supply, as they’ll face costs if they do not do so.
Therefore, this is a market-based response to a situation of market failure. Which is a good thing. Right?
August 10th, 2009 at 10:58 am
Or you could just charge consumers for the cost of the power they use. Raise it in dry years, otherwise lower it. They’re called incentives. They’re useful. Try them some time, Gerry.
I’m sorry but while National comes without Labour’s total corruption, so far at least, National still just wants to tax and regulate everything as much as Labour.
August 10th, 2009 at 11:04 am
ben / dimmocrazy – market-based insentives are all well and good… but look, 80% of power companies are govt owned, making them proxy tax collection services. So pricing must be controlled, manipulated, obfuscated etc to maintain or expand crown revenue.
August 10th, 2009 at 11:05 am
“The government won’t be paying the money.”
Who owns the power companies again Agatha? (Another damn socialist abomination.) You always have some convoluted and wordy attempt to divert attention from the bottom line.
Just charge whatever it costs to produce the power. No false subsidies. Forget all the ducking and diving. Just socialist window dressing.
Furthermore, power generation should be fully privatised and de-regulated. (Fully deregulated, not the arse wipe fraudulent process you commies call de-regulation). IOW, Get out of my life commie.
August 10th, 2009 at 11:07 am
ben,
“Or you could just charge consumers for the cost of the power they use. Raise it in dry years, otherwise lower it. ”
If there was a transparent way to let consumers know how much the power they are using actually costs at any given time, then maybe this would work. But it is hard to see how this could be achieved … .
To say nothing of the politics of the problem … good luck going to the electorate and explaining that in dry years pensioners will have to pay $20 an hour to run a heater in their flats – and if they can’t afford it, then they’ll just have to freeze to death.
Actually – there’s a good topic for one of DPF’s just hilarious satires on political party “policies” … he can do one on the ACT party one favouring pensioners freezing. ‘Cause that’s real clever and funny and stuff.
August 10th, 2009 at 11:11 am
I’m sorry if this goes against the grain (it sticks in my craw even thinking it) but in a tiny place like New Zealand, there simply isn’t enough “market” in the critical infrastructure areas to achieve a true “market-driven” pricing structure. Power generation is a cosy quad-opoly (is that even a word?) with the government owning a large stake. Pretending this is a “market” is ridiculous. The total rorted by the generation companies was $4 billion plus. In a small place like New Zealand, there is a genuine market for some items but there is clearly not for others. Critical infrastructure like power generation, water supply, internet provision (yet, internet provision) and mobile phone services are clear areas where price collusion among the small number of players has resulted in artificially high prices. In a true “market” consumers would have the power to simply take their business elsewhere, but in New Zealand that’s pointless (if it can even be done) because all providers are just as corrupt and gouge just as badly as each other. I hatge big government just as much as the next person, but when the government creates artificial markets, and actively or passively participates in price gouging, then it should either own the entire market or STFU and get out of the way.
August 10th, 2009 at 11:16 am
reddy,
I believe you’d be referring to Max Bradford’s preferred policy approach in the 1990s. By all means put that forward as the way to proceed. Please, please, please do so. Because that just labels you with a big LOSER tag in the political debate. Again.
Now, for those actually interested in real world/achievable solutions, the question is how to make sure the generators ensure there is a constant, secure supply (even in “dry” winters) at a price that doesn’t lead to poor people having to go without (because electricity is so fundamental a necessity that the public will not stand for stories of pensioners freezing to death ’cause they can’t afford it). I suspect that bridging this gap will cause Gerry Brownlie as much trouble as it has governments for the past 15-odd years.
August 10th, 2009 at 11:20 am
You will find that Genesis operates hydro power stations – Waikaremoana as well as Tongariro and Rangipo.
August 10th, 2009 at 11:41 am
“at a price that doesn’t lead to poor people having to go without ”
Gawd, you’re really laying the vomit inducement on thick this morning.
Same old propaganda and lies. These are the poor people whose pension money you took by force and then squandered, and whom now will need to wait to who knows when before they “qualifiy” to get their own money back. (if they’re lucky to get it at all before they die)
You do not care about poor people. You use them as political cannon fodder in your endless quest for power.
(You scaremonger on electric power as a means to political power.)
August 10th, 2009 at 11:42 am
This makes perfect sense. When there was a power issue last winter, and we had that stupid campaign – you have to remind yourself that you signed up for a contract where the price of power does not vary with the spot price. When the lakes are full, you still pay the same amount, and the retail power companies make money on the difference. It’s like as consumers we have bought insurance against the spot market prices.
Then as soon as the spot prices go high and the retail companies lose money on every unit we consume – they go crying to the government to get us to reduce power. Screw that – if they are losing money on every unit, then if I reduce power, they should compensate me part of the savings. Why should I turn off my heater just so someone else can make more money, especially when I have paid extra during years of plenty specifically so I wouldn’t have to pay so much then?
During the last power crisis, I didn’t reduce energy usage, and I think we have a duty not to, to force the retail companies into compensating us for doing so.
August 10th, 2009 at 11:44 am
Mummified – The real water is in South island and the Waikato river scheme – Waikaremoana, Tongariro and Rangipo are minimal. Dry year issues are mostly a South Island issue, where the big schemes are (and where Genesis isn’t). I admit my post was “quick and dirty”and not the detail.
August 10th, 2009 at 11:48 am
reddy
“(You scaremonger on electric power as a means to political power.)”
As do you, my good reddy.
We’re all lying in the gutter, it’s just I look at the stars.
August 10th, 2009 at 11:57 am
It is a measure of the mass derangment you have produced in NZ that people fear the privatisation of power. You have lied and lied and lied and lied until the truth is totally submerged under blanket after blanket of left wing subversion and propaganda.
Like health care, electric power generation is something that should never be left in the hands of socialists, so they can use it as a means to political power. All they ever really care about.
August 10th, 2009 at 12:01 pm
A hypothesis – People who “waste” power are far more likely to be able to reduce their power consumption, than those who exercise power conservation.
A colloray to that hypothesis – The largest beneficeries of the rebate are more likely to be those not already conserving power.
August 10th, 2009 at 12:03 pm
Like health care, electric power generation is something that should never be left in the hands of [capitalists], so they can use it as a means to political power. All they ever really care about.
See how easy that was?
August 10th, 2009 at 12:08 pm
“Saving power” is code for slipping back into the dark age. We don’t need to save power, we need to use more, its called growth, look into it. We have 10,000 years of coal just waiting to revitalise our nation.
That we choose of our own volition to sit on it and not use a resource is not a measure of how clever we are, but how stupid we have decided to be.
More sheep on the fames and less making the decisions is what we need.
August 10th, 2009 at 12:14 pm
I tend to agree with you Murray on the coal issue. There’s also a fairly substantial geothermal resource available but under-utilised.
August 10th, 2009 at 12:29 pm
Not to mention the nuclear option.
August 10th, 2009 at 12:44 pm
We don;t have nuke lofty but we’re sitting on unlimited power right now.
August 10th, 2009 at 1:04 pm
Benchmarking consumption to assess savings is going to be a big problem. One in four households apparenty change occupancy each year so there is no ‘benchmark’ for this 25%. Perhaps it could be argued that Dunedin scarfies in a flat can be benchmarked against the previous bunch of scarfies living there. In other instances it is not going to be so easy.
The ‘stick’ approach would be more expedient. With semi-smart metering (the type that does not interact with appliances) it is possible to set a tariff each half hour. Assuming a retailer purchases 80% on fixed contract and 20% at spot price, the retailer can set the retail tariff accordingly. The customer can even be given a choice , but at times of shortage migration to ‘fixed contract’ would not be allowed.
This could mean that someone arrives home from work and finds she is having to pay $2 a unit for power with the rate diminishing to a more usual rate at say 11pm. This will encourage savings but would probably be a political disaster.
The issue of ‘responsible’ use of water in hydro stations is troublesome and always will be. In the early days of electricity markets some spilling did occur concurrently with thermal generation being ‘on’, but this as markets have developed this aberration has all but disappeared. if a ‘dry year’ is looming, the power companies with significant hydro generation have to take a bet on whether to use water now or hold water back to mid winter to ensure that lakes are not empty when demand is at its highest. For their managements it is like taking a big wad of other peoples money to the TAB, and ‘passing’ (not betting) is not an option. It seems the Governmemnt is being advised to take control of this area of decision making. IMO if this happens this is the end of the ‘market’ for electricity.
The other thing is the possible splitting of generation and retail. The problem here is a thinly capitalised retailer would be very vulnerable to financial failure and hence may have to pay up front (or at least execute a bond) for its power purchases. TransAlta was OK while it owned the Wellington network, but decided to dispose of this to meet Max Bradford’s reform requirements. It envisaged purchasing what is now Contact but this was politically unacceptable. Winston Peters saw to it that Genises, Mighty River and Meridian would not be sold, leaving Transalta (NZ) as a thinly capitalised retailer. TransAlta saw the writing on the wall and sold the NZ operation to a bigger mug ie Natural Gas Corporation, and in the next ‘dry year’ NGC nearly went down the gurgler. Hence a retailer needs to be able to negotiate long term contracts with generators and need a significant capital base upon which shareholders want a reasonable return.
I cannot help thinking that Gerry is receiving rather lame advice from bureaucrats too used to working for a Labour government.
August 10th, 2009 at 1:26 pm
I know we don’t have nuke at the moment Murray, but it is a viable option in my humble opinion.
Cheap, unlimited, clean & reliable.
Waste issues will be overcome.
August 10th, 2009 at 1:50 pm
Simple solution to the power problems – start to properly privatise the current government generators (float them or sell them at a fair market price) then actually allow new stations to be built by the private sector. That way everybody in the sector will be competing on a level playing field not manipulated by the government and the market will sort the rest out.
August 10th, 2009 at 2:49 pm
The silly thing is we don’t *need* nuke. We have plenty of geothermal and coal. We also have plenty of greenies we can stick into the furnace when the coal runs out (would that be *clean* coal?).
August 10th, 2009 at 3:04 pm
AG there are actually all kinds of ways to let consumers know about the price of electricity. Studies show they work. Here’s an example of a massive study in California I was loosely involved with. In that pilot consumers receive a phone call a day ahead to tell them tomorrow will be a critical price day. Other options include home indicators that show price either numerically or via colours.
August 10th, 2009 at 3:09 pm
gazzmaniac – this is what was intended. Business Round Table commissioned papers takes this line. The way the market is supposed to work is the ‘spot price’ which goes up when there is a shortage. Domestic customers because most have simple metering read two-monthly are effectively immunised rom the spot price. Generators want a market for their power, blocks of domestic (and small commercial) customers are great to have followed by term contracts with other customers. They need this for business predictability. Larger businesses take a punt on how much to buy on contract and how much to buy on ‘spot’. As ‘spot’ is low most times, they over-buy on ‘spot’
Guess what happens – when there is a shortage, the spot price heads for the sky, which is the whole idea. Now all the business CEO’s go screaming off to the Government to ‘do something’ and rein in these evil generators for gouging on spot prices. They are the same CEO’s who belong to the Round Table and whose subs are paid by their shareholders. Roger Kerr the CEO of the Business Round Table is strangely silent at times of a power shortage – he has to be or his members will skin him.
There is a variation to this. If a dry year is looming, the generators in autumn bid high prices for their hydro power so thermal power is cheaper which causes spot prices to stiffen somewhat. They do this to save the water to get through the winter peak. Critics call this ‘gaming’ and consider that they should sell the hydro power cheaper in the autumn and not worry about winter until it comes.
Now if power companies and their prospective shareholders think the Government will clobber them for ‘gouging’, ‘gaming’ etc, they will tend not to invest in new plant. To cover dry years, they can invest in chap capital,but expensive to run plant (eg gas turbines driven by aeroplane type jet engines – advantageous because they end the engines off to Air NZ for srervicng), but they rely on windfall profits in dry years to give shareholders a return on their investment in this sort of plant. It is those windfall profits that are vulnerable to attack by the Government and its agencies (eg Commerce Commission). Hence the reluctance to invest in dry year peaking plant. Labour fixed this by getting the Electricity Commission to provide such plant using a levy imposed on consumers.
August 10th, 2009 at 3:37 pm
Man o man, finally someone who dares to say the dirty word: we are indeed sitting on a fortune, and its about time we start digging it up and burning it like there’s no tomorrow. Reduce the power prices by 50% and see what that’ll do for the economy.
I also bet that we can find a way to filter co2 out of the fumes if we really want to. If I remember things correctly from chemistry class (and I admit it’s a long time ago), seawater might play a role in that. We have plenty of coal and plenty of seawater, what we need is the engineering to sort the technology out. Growing economies can reduce pollution and environmental issues, declining economies can’t. Are we really to thick to get that?
August 10th, 2009 at 4:16 pm
I’m not talking about options lofty, I’m talking about what we HAVE but refuse to use.
Infinately more stupid than just dithering about what new thing we should be looking at.
August 10th, 2009 at 6:24 pm
Well now that Smith and Key have decided to abrogate their responsibility to Kiwi’s and supply the Russians etc with a free money supply so they can be seen to be politically correct at the UN the problem is about to get worse.
Today it was decided to reduce carbon emissions to between 10 and 20% below 1990 levels.
So guys don’t buy shares in anything the generates or uses energy because you are going get scammed. Don’t put feul in your vehicle and don’t hook up to the National Grid.
I just can’t believe the lack of intelligence that these people display.
Oh by the way we need to reduce our population to 1990 levels as well so Crusher had better get the hangman back for the bad bastards and Bennet better stop the DPB immediately or we will never meet our population target and oh yes those of you who were contemplating more than one child,sorry no we are going to vasectimise you after one.
What a bunch of wanking losers run the bloody Govt.
August 10th, 2009 at 7:08 pm
“See how easy that was?”
Easy if you’re a pathological liar. The right do not want to expand government power, they want to reduce it. Your attempted reversal is pure fakery and lies. Its all you ever have.
August 10th, 2009 at 8:20 pm
What a load of horse shit. So we get $10 if we save power but Nick Smith will want $30 for our carbon emissions, go figure.
August 10th, 2009 at 10:46 pm
This is all about incentives. The powercos face no significant incentive to professionally manage supplies and load all the risk and cost onto consumers. The Winter Review showed this and said the market should change to force them to wear the cost of non supply rather than just allowing them to wash their hands of problems and make them political issues.
Last year Contact and Meridian burned through water early in the year and basically prayed for rain. It didn’t happen. They then ran a savings campaign where consumers suffered loss of utility in terms of reducing heating and lighting for the benefit of powercos, who were then able to reduce their peak costs. There was no transfer of this benefit to consumers. appears Brownlee is attampting a crude method of transferring some benefit.
Meanwhile the state monopoly Transpower refused to reinstate an asset it had closed down without reason or notice – HVDC POle ! – and that has been costing consumers millions upon millions of dollars because of the imbalances in the system it has created. They should have been crucified for that but they are all too cosy and no-one has the political will to hold them accountable for their fuck ups
August 10th, 2009 at 10:54 pm
Incidentally, if this is the biggest thing to come out of the ministerial review then it appears it may be underwhelming and could undermine the previously big talking Gerry. He seems to be backing off all the big changes he had been implying he was going to push through. That’s got to affect his credibility
All this stuff about privatisation or socialisation just tells me one of the best things the politicians could do is get the frack out of the market, stop playing games and dabbling to fix short tem issues and grandstanding.
August 11th, 2009 at 2:21 am
@Redbaiter-
Exactly why would we want those democratically elected people controlling our basic necessities, when we can have the elite upper class doing it? Better yet, why not do away with this nasty democracy thing and replace it with an Oligarchy. That way we would get rid of those dirty evolutionism believing socialists.
August 11th, 2009 at 11:15 am
The market will regulate the industry much better than an interventionalist state system can. The market has a simple check and balance – if it costs too much or is too unreliable then people will change supplier. Under a state system there is no such check or balance.
August 13th, 2009 at 9:34 am
Re power savings,
I am glad you don’t have the clowns ruling us in the EU.
Ordinary Light bulbs (over 100 watts and all frosted types and halogens, the most popular kind) are banned from 1 september
People in most countries choose to buy ordinary light bulbs around 9 times out of 10 (light industry data 2007-8)
Banning what people want -and choose to pay for in using- gives the supposed savings – no point in banning an impopular product!
If new LED lights -or improved CFLs- are good,
people will buy them – no need to ban ordinary light bulbs (little point).
If they are not good, people will not buy them – no need to ban ordinary light bulbs (no point).
The arrival of the transistor didn’t mean that more energy using radio tubes were banned… they were bought less anyway.
100 W+ equivalent brightness
is ironically a particular issue – difficult and expensive with both fluorescents and LEDS – yet such incandescent bulbs are first in line for banning in both America and the EU…
Re energy and CO2 emissions,
light bulbs don’t give out any gases – power stations do,
power station emissions can be dealt with directly, and the overall savings aren’t great anyway;
even if they were, a tax would be better, giving government income with the reduced sales, that could go to
projects like renewable energy or home insulation schemes etc,
lowering emissions more than any remaining bulb use would cause them…
http://www.ceolas.net/#li1x onwards
(from dublin, ireland)