If anyone other than me had bothered to read through the reams of paperwork 'generated' by the electricity industry (pun intended) they would have a better idea of the issues.
1. The so-called National Energy Market (NEM) isn't - national, that is. It includes only the Eastern States, TAS and SA. WA and NT are separate. No links between them.
- So it isn't possible to 'exploit' solar differences (for example) between West and East, or 'share' across the country. And what links there are, are jealously and zealously guarded and restricted. Train gauges all over again!
2. The National Energy Rules and regulations (NER) that govern the industry pretty much lock out any rapid change to anything other than centralised generation and large-scale transmission grids. Think 'vested interests'
3. The way in which the price of wholesale power is set is ludicrous. Apart from long-term contracts entered into by retailers with generators to supply X megawatts at Y price, there is the 'spot price' market for the 'excess' power needed when the 'base' load is exceeded. In practice this is most of the time....
- the regulator sets only the maximum price, but this is based on what industry tells them. It is presently $12.50/kWh. But usually they pay way less than this. However, the *way* in which the actual price is calculated is bizarre - the max spot price is averaged every half hour (based on the six previous five minute intervals' prices) and then the retailer who first 'buys' at that price then determines the price ALL retailers pay for that half hour. In other words, they all pay the price of the most desparate retailer - and pass that cost on to the consumers - rather than some paying a lesser price based on their actual need (ie less desperate for extra 'spot' power)
4. The way in which the Rules are written, requiring a high percentage of reliability in service supply (especially in 'peak demand events') in order to prevent brownouts due to excess demand, requires the retail and transmission networks to 'gold plate' their networks to be able to cope with the excessive demand that happens on perhaps 4 days of the year.
- in other words, those hot days when everyone's A/C units are on full blast. Ergo, those with A/C on full blast are those who are responsible for the increase in power prices. Try selling *that* one to the 'general public'..!!
5. The Australian Energy Market Operator (AEMO) has proposed a raft of minor changes to help lower retail prices, one of which is Demand Supply Management (DSP). This is where the retailers get to switch off A/C units and pool pumps on a rolling basis in order to prevent local demand-related peaks, which in turn enables them to build less heavy-duty (and therefore less expensive) transmission infrastructure.
- this form of DSP was trialled in the Solar Cities program with considerable (though small and local) success. It does work, but try selling *that* one to the masses!
They are also proposing that 3rd Party Aggregators be allowed to sell power to the retailers, potentially 'aggregating' supply from multiple small generators and selling on the spot market at a higher price than the background wholesale price, but presumably skimming a fee off the top for themselves.
6. The latest Standing Council on Energy and Resources (SCER) report highlights that at current infrastructure levels, without any additonal or increased capacity of infrastructure, around 20% of demand could be easily met by "distributed generation" meaning local, smaller scale generators - solar PV, wind, wave etc - even gas-powered....the idea being that local generators feed into the existing grid without the need to upgrade it, and supply local demand, reducing the need to import it long distances over (what would otherwise need to be) much larger cables.
But, predictably, all of the above are being resisted mightily by the vested interests in play.
7. The way in which the rules and regs are writen mean that the profits of the generators and distributors rise as they install more and more infrastructure, as the regs allow them to simply 'pass through' any such costs without further recourse to the regulator.
8. In NSW where IPART sets the price, it's so hamstrung by rules it can effectively only rubber-stamp what the retailers ask for, provided that - within the 'rules' - they can 'justify' their forecast expenditure vs forecast cost vs forecast revenue.
- what they aren't telling us is that the 'estimates' of demand for 2012-13 were down by 5% actual, and the ongoing foreward estimates of demand for 2013-14 could be down by an additional 3% - but they ain't going to drop the retail price accordingly, are they?
The bottom line is that we need it, we 'demand' it, and they supply it - so we have to pay for it. Even with better regs and rules the cost would not be significantly less than it is today.
But the notion that there is 'real' competition in the market is an utter furphy, and due to the distributors owning the 'poles and wires' (hello? Telstra?) they are effectively 'gatekeepers' and can charge a 'toll' on any new entrants into the 'market' - just as Telstra did.
So unless electricity can be 'beamed' through the atmosphere somehow, and thus bypass the gatekeepers, and until the cost of stand-alone and battery storage falls enough to make it sensible economically, we're stuck with them - and their/our hyper-inflated price.
Posted Tuesday 8 Jan 2013 @ 7:15:25 am from IP
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