5 reasons you may be paying too much for electricity

Here are the main reasons why you could be paying too much for your power, and how to clean up your kilowatt count and save money.

How are you working to reduce your electricity bills?

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There could be a bit of well overdue transparency on the horizon so consumers can make preemptive decisions.

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The main reason for high energy prices remains over-investment in poles and wires by a federal government run group!

That Choice should run such a slack article infuriates me!

Perhaps you could expand a little on which federal government run group you are referring to and how they fit into the bigger picture of electricity pricing, with some references - and why you think the Choice article is ‘slack’?

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Isn’t the Choice article looking at consumer behaviour and retail

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Isn’t the Choice article about consumer behaviors and what we can do individually about our circumstances?

The other questions concerning the high cost of electricity supply whether due to lack of retail competition, poles and wires diamond plated, or wholesale pricing and generation are all valid. There is another topic in the community looking at that.


Or another about retail supply options

For us in a more rural setting and fortunately not on an SWER line we would suggest that not enough has been spent on our poles and wires. Instead the investment may have been wasted elsewhere? That’s for a different topic. Now without power for the third time this year, but not a record yet as it has only been 10hrs.

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It sounds like you need a battery! Being off-grid, it’s been years since I had a “blackout” (my wife and her mother tried to run every large appliance at once and the inverter dropped out for a short time due to high temperature, but now I have a larger inverter).
People talk about payback times for batteries still being quite high, but what is a freezer full of food worth? Around here the grid power has gone off for up to 2 days after storms in recent years.

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On to it.
We use gas for HW and cooking, with LED lighting.
So we just need to run our high star rated fridge/freezer, house pump and UV filter ideally.

We have signed for a PV system still grid connected. All the offers to include battery were unrealistic.
I’m on plan “B” with a small inverter and battery dedicated to the three essentials only.
As a separate circuit this also gets safely around the anti islanding requirements.

Off grid will come when the budget is ready for it.

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Apparently more work is needed … :wink:

Doesn’t cover WA or NT, which is probably a good thing …

If you want to jump straight to the ACCC’s 120+ pages of wisdom, the report is >>>HERE<<<

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There is an article that discusses “Demand Response”. This demand response is where consumers reduce or turn off their electrical usage during Peak demand times. This reduces the need for some generation to kick in to keep the system stable and it also reduces the need for some costly expansions to the Grid supply, these generators are usually the very high price suppliers of energy to the grid. This demand response of cutting/reducing the need thus reduces the cost of supply saving the consumers money.

In the article it references research by The Australia Institute (TAI) that Energy Retailers are delaying the introduction of this type of system so they can benefit by charging consumers more than they need to if this type of scheme was in place. If the research is correct, and I see no benefit to it not being so, then the Electricity Industry needs to be made to take on these changes as a matter of urgency.

https://thenewdaily.com.au/money/consumer/2019/08/06/demand-response-electricity-australia

To download the pdf of the report:

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This is real as there is an effect in the UK…where at the end of popular soap TV shows, there was a considerable peak in energy use due to a lot of viewers turning the kettle on for a cuppa. The UK grid operators would plan extra generation to cover this spike in demand.

What is interesting is this effect is lessening due to streaming services and catch up TV…

Demand response is not new to Queensland. Energex in SE Queensland has been promoting the use of PeakSmart Air conditioning for a number of years. PeakSmart is where the network operator (Energex) can send a signal to an operating air conditioner to modify the operating settings similar to an economy/efficiency mode. This is done when there is a peak demand on the network to assist in maintaining widespread supply and stability of the whole network. There are also incentives for joining the program…

https://www.energex.com.au/home/control-your-energy/positive-payback-program/positive-payback-for-business/air-conditioning-rewards

There have been other initiatives implemented by big energy firms and government in Australia and internationally to reduce the magnitude of a peak load. Such has included replacing conventional light bulbs in buildings with more energy efficiency types. rolling out energy efficiency schemes (e.g. ecoBiz), encouraging the purchase of more energy efficient appliances (e.g. water heating, washers and driers), instructing large industrial consumers to reduce use and also request operations with backup power supply to disconnect from the grid and use their backup power system and moving non-essential use to a off peak tariff…such a pool pumps… There have been other initiatives implemented to also assisting reducing demands, particular during peak loads periods.

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I agree there are schemes but they don’t seem to go far enough. From the report the following are from the summary

“The Australian Energy Council (AEC), which represents all the major generators and retailers, opposes this reform. The AEC has proposed its own rule for wholesale demand response which would see energy retailers remain as the gate-keepers of demand response. While wholesale demand response would still enter the National Electricity Market, consumers would not be free to contract with a third partydemand response aggregating firms without permission from their retailer”

“The ACCC has rejected the AEC ‘gate-keeper’ model, because it is anticompetitive and would harm the interests of energy consumers”

“While the Federal Government support the ACCC’s recommendations in general, it has been largely silent on wholesale demand response competition since former Energy Minister Josh Frydenberg spoke supportively in 2017”.

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Yes, I suspect that the generators would oppose the schemes as this is when power prices are also at a peak…and why it is attractive for generators such as gas to come online and make considerable money quickly.

I understand that AEMO and potentially the AER supports the initiatives used in SE Qld as it can protect the network in the times of peak demand…and also reduces capital investment by the network operators to ensure that the network handles a potentially higher peak than would otherwise be the case with adoption of such initiatives.

The gas sector also has similar initiatives when demand exceeds supply. This may mean rampdown of big gas consumers to ensure that the gas network doesn’t fail (which would then effect every user).

It is possibly disappointing that Report/Article authors didn’t consult with the network operators to see how they are managing peak demand loads as it may have produced a more balanced (realistic) report. There are many reports about initiatives which have been adopted…


https://www.energex.com.au/home/control-your-energy/managing-electricity-demand/demand-management-plan-and-initiatives

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There are swings and roundabouts with this plan.

We installed a single aircon in Brisbane two years past.

On the plus side:

  • you get a $200 cash payment on installation for a system with 4-10kw cooling capacity,
  • the system stays on during load shedding but at a reduced cooling capacity,
  • load reduction is supposedly only a few times each year during extraordinary peak demand,
  • And if your room is already cooled down earlier in the day the impact may not even be noticeable?

On the negative side:

  1. the install will take a little longer as there is also a smart control device to install inside the aircon,
  2. there is no ongoing saving from the option through a lower tariff, or other payment,
  3. application for the device and incentive reward is the responsibility of the owner,
  4. If you work when coming home and are unlucky to switch on during a PeakSmart load reduction it will take longer to cool down. (The $200 was probably spent some time past, and you may question the wisdom of the decision.)

Our experience with peak smart has been a positive one. Partly because the aircon an MHI inverter model is very efficient and possibly one size larger than absolutely necessary. The next size down was marginal for peak summer loadings.

It is an alternative to off peak or controlled load switching were all power is lost to the controlled items in the household.

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"A string of unplanned coal generator outages – including the dramatic explosion at Callide in late May – resulted in nearly 1,000 days of “baseload outages” in the second quarter alone and sent average wholesale electricity prices to record highs.

New data released by the Australian Energy Regulator show that the average spot price in Queensland in the second quarter jumped more than three-fold over the same period a year ago to its highest ever level of $141/MWh.

In NSW, which was also hit by unplanned coal and transmission line outages, spot prices also trebled to an average $127/MWh, its highest level since 2007."

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This reference could have gone under several other threads on monopolies. Keep in mind that these kinds of problems, of artificially setting fair market price, only exist when governments allow natural monopolies (such as poles and wires) to be in private hands. So if price gouging is going on it is the responsibility of those who sold the asset and then failed to establish proper mechanisms to keep prices reasonable.

Your household power bills could be 15% cheaper, if Australia’s energy regulator was doing its job

This offer gives Spark a RAB multiple of 1.5. This suggests the monopolies Spark has a share in are charging prices 53% higher than needed to adequately compensate investors

The impact on customers will vary, but these calculations suggests network services charges should be about two-thirds current levels. This would make household electricity bills about 15% lower than now.

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In Qld, most of the generation and all of the distribution is owned by the Qld Government.

The previous “treasurer” took $4 billion from the generators as a “special dividend” to prop up his dodgy budget whilst the generators gamed the spot market for electricity prices.

Trying to blame private enterprise for rip-off electricity prices in Qld doesn’t wash.

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You have quite missed the point that where the poles and wires have been sold to private enterprise they are (according to the linked assessment) making excessive profits due to poor control by the agency that was established to prevent just that.

If the state government has not sold that asset to the private sector in some places it is entirely irrelevant to this problem because the return on those assets are not regulated by the AER.

You have invented your own generalisation and then turned about to say such a generalisation is wrong.

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That’s likely a good news story.

In this example, how lucky is it to be a teacher in Ontario?

Spark Infrastructure owns controlling interests in two Victorian electricity distributors (Citipower and Powercor), Transgrid in NSW, and South Australia’s main distribution network, SA Power Networks.

In August, Spark’s board approved a A$5.2 billion takeover offer from US private equity giant Kohlberg Kravis Roberts and the Ontario Teachers’ superannuation fund.

Assuming of course this gets a rubber stamp from the FRB?

Note:
A slightly different discussion,

  • If we are to discuss whether foreign ownership of essential services assets is really in the best interests of consumers?
  • It’s also possible to consider whether it is strategically wise having a large a major foreign power’s investors heavily involved in Australia? The more they have to loose the keener they may be to help out.
  • In respect of carbon reduction strategies and increasing foreign investment in existing assets, there is potential for increased sovereign risk if a lower carbon future strands the investments. Are we locking ourselves in to how things are? Shades of the BAC (Brisbane Airports Corporation) second runway funding circus.

At least in the Queensland example the residents retain direct control of their investment. Even if the Government takes with one hand to give with another. That’s what all governments do?

P.S. edit added comment from The Guardian re concerns over the possible take overs. It’s really worth reading the full article.

Yet the problem remains — and if these takeovers are successful then AusNet and Spark Infrastructure will almost certainly be delisted. We will then lose vital information on RAB multiples that allows objective assessment of the regulator’s decisions.

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That KKR is interested should be a message unto itself.

KKR is a corporate raider that prospers by purchasing undervalued and distressed assets, works on the accounting to make them look as valuable as they can on paper, then extracts every possible dollar and dumps the ‘investment’. Sometimes it is quick and sometimes takes many years. They are not in any other business.

The fate of Dick Smiths, although not by KKR, is illustrative of the ‘corporate raiders’ play book’.

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