Confirmation the electricity market is broken

[king1]

received this email from Electric Kiwi today 
Sorry about the layout being a bit messed up.

Seems to me this sort of a price increase is relying on loyalty which I am not sure exists in the market these days...  

Not far off a 50% price increase across the board.  I like supporting the small players, but loyalty only goes so far - this feels like a death knell for Electric Kiwi and probably the other retail only suppliers...

Important information about your electricity prices
 
 

 

 
We are writing today with some news regarding your power prices and the electricity market.
 
Unfortunately, wholesale costs are soaring like we have rarely seen in New Zealand.
 
What’s going on?
 
You may have seen in the news, and via our public comments that wholesale electricity conditions have recently worsened.
 
On the 18th of July we stopped accepting new electricity customers. When we made this decision wholesale prices had increased by 48% over six months and we’ve seen no improvement in the market since then.
 
As you can see in the below visual, the situation in New Zealand right now is pretty severe.
 

 
Why is wholesale rising so much?
 
We have been saying for years now that market reform is needed in order to stop the market failure and resulting mega-profits for the large gentailers in our industry.
 
In 2023 we raised a complaint with the Commerce Commission regarding misuse of market power in New Zealand energy markets. The Commission agreed there was an issue but passed responsibility for resolution to the Electricity Authority who have the policy tools to quickly enact market reform.
 
Commissioner John Small1 has stated “The wholesale electricity market is of real concern…we think it'll be much faster [to work with the Electricity Authority] than dragging four or five big companies through the courts for three years and then be told that three years ago what you did was illegal. That doesn't solve anything”.
 
Yet what has the Electricity Authority done to address this urgent problem? A year on and nothing has happened.
 
Meanwhile, unsurprisingly, the big four Gentailers - Mercury, Contact, Meridian and Genesis - are making record profits. In FY22 they made $1.9bn, in FY23 they made $2.2bn and all indications are that they’re on track for even larger profits in FY24.
 
New Zealand is in a great position to provide green energy at reasonable prices for Kiwi households and businesses. It will take innovation, integrity, and a market that fosters competition to get us there.
 
Price change notice
 
From 20th September 2024 your prices will change. The average cost increase for customers in your area is 128 cents per day. But you can reduce your costs by moving more power off-peak.
 
We hate doing this, and completely understand if you choose to seek better prices elsewhere. If you are looking around, we would suggest you use Powerswitch. This is a free site run by Consumer NZ that compares electricity prices.
 
Your prices are shown below (excluding GST):
 

Existing

From 20th September 2024

Fixed cost per day:

Current: $1.24

                                                    From 20th September 2024: $0.99
Usage cost per kWh:

Peak: $0.2997
Off-peak shoulder: $0.2098
Off-peak night: $0.1498

From 20th September 2024

Peak: $0.4553
Off-peak shoulder: $0.2732
Off-peak night: $0.2277

 

Peak usage charges apply weekdays 7am-9am and 5pm-9pm. Off-peak night charges apply every day from 11pm-7am. Off-peak shoulder charges apply weekdays 9am-5pm and 9pm-11pm, and weekends 7am-11pm.
 
The amount of change you see on your bill will depend on your usage and how much you use during your Hour of Power and cheaper off-peak times.
 
Simple ways to do this include running the dishwasher, dryer or washing machine off-peak. But there’s a lot more you can do too. We’ve created a handy guide that will help you become a master of load shifting.
 
Electric Kiwi entered the market to make things better for Kiwis. We will continue to advocate for the change that is needed to get this industry back on track.
 
Thanks for being an Electric Kiwi customer. If you have questions for us please reach out.
 
Cheers,
 
Luke Blincoe
Chief Executive
Electric Kiwi
 
1John Small, "Nine to Noon" interview by Kathryn Ryan, Radio New Zealand, July 24, 2024.
 

[Praktica]

I got an email yesterday advising a rise of $20 + gst for a bottle of LPG. Haven't heard anything from Meridian about power prices, though.

[Oh_hunnihunni]

I liked Electric Kiwi, but I got so fed up with their payment method issues I finally tossed my toys out of the cot and went elsewhere.

Not sure I am better off though. But I am able to maintain my account in credit more easily, which reduces stress. So long as I ignore the numbers on the bill. Which are steadily increasing.

[harm_less]

Definitely major problems with NZ's electricity supply system. This report on the RNZ news today provides more evidence.

Personally I find the Powerswitch site pretty much worthless in its current form. As the owners of 2 EVs and a sizeable solar setup the PS site doesn't cater for either variable in its functionality. For us our total import from the grid in 12 months has been just under $1,000 with $3,200 of 'earnings' from export and self consumption of our own power. For this reason Powerswitch's lack of Feed in Tariff integration in its functionality makes it of little use to us, together with its consumption parameters not including EV charging.

In the wider perspective the potential ramping up of electricity prices will act as an effective incentive for adoption of solar, and if things continue to worsen a reason to invest further in home batteries sufficient to cut links with the grid altogether. We currently don't have a battery in our system but instead divert to HWC and EV charging quite effectively. One of our EVs has bidirectional charging capability which presents the possibility of it serving as a home power source by way of a compatible charging unit but with that technology yet to gain traction in NZ as yet that's a waiting game for us.

[nzoomed]

Yes its a bit of a concern, for now Im not paying much for power at all, but it has gone up the best part of 50 dollars a month in the last 12 months or so, quite often in the summer months my bill was typically under $100.
Customer loyalty has been a big driving force with electricity retailers for some time, Trustpower(now mercury) was among the worst.
They would lock you into fixed term contracts, tempt you with their free home appliances which were low value to begin with and make it look like you have a good deal. Even with the rebate cheque they would give you in the post, was not enough to make up with the savings to be had elsewhere.
Im with powershop and cant really complain, they have been good to deal with and give good discounts, yes they give you a loyalty bonus too, but there are no contracts.
Powerswitch seems to suggest their rates are the lowest as far as my area and usage goes anyway so I may as well stick with them.

My main concerns are how much power is likely to increase going forward and is ever more tempting to install solar. But be warned, these installers are ripping everyone off on solar systems too.
Im a good DIY'er with electronics experience so am saving up to go off grid, I dont need much of a system to make up for my low use either.
We are being ripped off with the prices of solar gear too, ive got a friend who has wholesale access to top brand solar panels and can get 430W panels for only around $150 each.
Driving EV's will be less popular if electricity prices to charge them soar, having a solar system will make it a more attractive option for sure.
Battery technology is not only advancing rapidly but prices are falling fast too, today is not a better time to go solar.

[harm_less]

Seems like a problem worldwide that solar panels' prices are getting real cheap but the cost of installing them including lines company consent is now holding overall price stable.

The electricity price for home charging an EV is only around 3.5c/km (based on typical 5km/kWh consumption @ 18c/kWh) so prices doubling would still have EVs a lot cheaper than fuelling an ICEV which usually runs to ~23c/km (8.5L/100km @ $2.80/L), plus the much lower maintenance cost for an EV.

We are about to complete our 12 month contract with Octopus and I noticed that they no longer have fixed period fixed rate contracts going, presumably so they can react to the volatile wholesale prices. I do wonder too how long Meridian will offer 5 year fixed rate contracts on their solar or EV plans for the same reason.

The beauty of having solar is that we have insulated ourselves from what is looking more and more like a train wreck of an electricity supply sector in NZ, and that situation is one we well imagined when we decided to invest in our present system. Essentially we have paid what currently is the equivalent of ~9 years of electricity use but as prices rise that pay back period essentially gets ever shorter plus our fixed price EVs' charging is included in the equation.

[Lilith7]

A pity that this & every govt doesn't make it easier for people to install solar panels.

[king1]

well I bit the bullet and signed up with one of Contact Energy's plans

I would much prefer to support the smaller players in the market but we're reasonably high use and 40-50% increase would have added an extra couple of hundred a month...

Maybe when someone sorts the wholesale market out we'll move back. Was on Flick a few years back at the wholesale rates plan they had and was saving something like 20% on the going rate at the time - but thats all gone by the by now...

[zqwerty]

Meanwhile in Europe:

Negative Power Prices Hit Europe as Renewable Energy Floods the Grid

https://oilprice.com/Latest-Energy-News/...-Grid.html

[nzoomed]

And also this here:
https://theconversation.com/nzs-electric...ame-236943

[harm_less]

And also this here:
https://theconversation.com/nzs-electric...ame-236943

In addition to the case raised in that article incentivisation of domestic solar can be as simple as adjusting the Feed in Tariffs (FIT/ price paid for customers exporting to the grid. Presently the low FITs comparitive to supply (import) price acts as a disincentive for those considering installation of solar and a reason for those with solar to export as little as possible of their generation to the grid, instead favouring self consumption including onsite storage to maximise their system's economic viability to the detriment of contribution to the grid for public benefit.

Interestingly it is worth noting that most of the attractive FIT rates are currently from small providers such as Octopus and Ecotricity rather than the big gentailers. Octopus in particular have recently been publicly critical of the NZ electricity supply structure as it prevents innovative TOU pricing models such as those Octopus is presently offering in the UK.

[Oh_hunnihunni]

And Oz is about to build the biggest solar power farm on the planet. Mind you, they have the space...

We should look at wave power generation. We have the space...

[king1]

Had to chuckle at Shane Jones' little faux tirade at the gentailers, the govt owns a majority stake in three of the four - no conflict of interest there...

[harm_less]

And Oz is about to build the biggest solar power farm on the planet. Mind you, they have the space...

We should look at wave power generation. We have the space...

That looks like an impressive solar farm. Not surprising that the big investors are moving into solar generation as it is the one of the cheapest ways to make electricity on the planet currently.


While tidal seems like a good idea the sea is an extremely aggressive environment to locate machines so the maintenance issues are a real problem, and that's apart from the environmental complications including fish and mammal harm and modification of local erosion characteristics.

[harm_less]

Interesting interview of Simeon Brown by Jack Tame on Q&A this morning but very Brown's attitude of placing thermal/gas fed generation as the preferred option in dealing with the current situation was disappointing to the point of infuriating. (First 14 minutes of this Youtube link).

Firstly beyond the usual blame on the previous government spiel he then goes on to say that the Lake Onslow proposal was damaging because it caused the existing generators to pull back on developing new capacity. That to me sounds very much like the incumbent electricity suppliers sensing a threat to their cosy market dominance and then pulling whatever levers they could to ensure the failure of the project. Keep in mind that those generators are government owned so by association our government is restricting long term development of potential solutions to our electricity supply issues on multiple fronts.

Secondly Jack pushed Simeon on the comparative cost effectiveness of developing a LNG terminal vs. blanket rooftop solar rollout. Of course Simeon played the irregular generation of solar but Jack countered that with the approach that solar can be used when available to mitigate hydro dam flows thereby utilising their significant storage capacity as a virtual battery. Simeon absolutely refuses to recognise this potental, instead doubling back on his claims that gas powered thermal generation is the only option NZ has to address the current generation shortfall.

It must also be kept in mind that the way our electricity supply system structured the wholesale price is calculated every 30 minutes based on the most expensive generation method being used at that instant which in the case of peak loading is thermal gas or coal fired. That rate then applies to all generation being used at that time so is effectively a huge windfall for the hydro generators whose cost of generation is far less than what they can charge on the wholesale market. Yahoo... money in the bank! The strategy that Simeon Brown is proposing by pushing for thermal generation including by the use of even more costly imported LNG will effectively lock NZ consumers into higher prices for longer. Again this is an added windfall for the existing gentailers as well as restricting the viability of solar and wind capacity by the smaller players, who are stuck with selling their generation into a market biased by the huge advantages being enjoyed by their competitors and potentially onsellers of that generation.

The system is well and truly broken and based on Simeon Brown's utterances in this interview it is unlikely this government will do anything to improve that situation.

[Praktica]

Interesting interview of Simeon Brown by Jack Tame on Q&A this morning but very Brown's attitude of placing thermal/gas fed generation as the preferred option in dealing with the current situation was disappointing to the point of infuriating. (First 14 minutes of this Youtube link).

Firstly beyond the usual blame on the previous government spiel he then goes on to say that the Lake Onslow proposal was damaging because it caused the existing generators to pull back on developing new capacity. That to me sounds very much like the incumbent electricity suppliers sensing a threat to their cosy market dominance and then pulling whatever levers they could to ensure the failure of the project. Keep in mind that those generators are government owned so by association our government is restricting long term development of potential solutions to our electricity supply issues on multiple fronts.

Secondly Jack pushed Simeon on the comparative cost effectiveness of developing a LNG terminal vs. blanket rooftop solar rollout. Of course Simeon played the irregular generation of solar but Jack countered that with the approach that solar can be used when available to mitigate hydro dam flows thereby utilising their significant storage capacity as a virtual battery. Simeon absolutely refuses to recognise this potental, instead doubling back on his claims that gas powered thermal generation is the only option NZ has to address the current generation shortfall.

It must also be kept in mind that the way our electricity supply system structured the wholesale price is calculated every 30 minutes based on the most expensive generation method being used at that instant which in the case of peak loading is thermal gas or coal fired. That rate then applies to all generation being used at that time so is effectively a huge windfall for the hydro generators whose cost of generation is far less than what they can charge on the wholesale market. Yahoo... money in the bank! The strategy that Simeon Brown is proposing by pushing for thermal generation including by the use of even more costly imported LNG will effectively lock NZ consumers into higher prices for longer. Again this is an added windfall for the existing gentailers as well as restricting the viability of solar and wind capacity by the smaller players, who are stuck with selling their generation into a market biased by the huge advantages being enjoyed by their competitors and potentially onsellers of that generation.

The system is well and truly broken and based on Simeon Brown's utterances in this interview it is unlikely this government will do anything to improve that situation.

Hmmm....we know that some MPs seem to have signed up to support their donors' agendas. I wonder if simple simeon has been bought by someone?

[Lilith7]

Interesting interview of Simeon Brown by Jack Tame on Q&A this morning but very Brown's attitude of placing thermal/gas fed generation as the preferred option in dealing with the current situation was disappointing to the point of infuriating. (First 14 minutes of this Youtube link).

Firstly beyond the usual blame on the previous government spiel he then goes on to say that the Lake Onslow proposal was damaging because it caused the existing generators to pull back on developing new capacity. That to me sounds very much like the incumbent electricity suppliers sensing a threat to their cosy market dominance and then pulling whatever levers they could to ensure the failure of the project. Keep in mind that those generators are government owned so by association our government is restricting long term development of potential solutions to our electricity supply issues on multiple fronts.

Secondly Jack pushed Simeon on the comparative cost effectiveness of developing a LNG terminal vs. blanket rooftop solar rollout. Of course Simeon played the irregular generation of solar but Jack countered that with the approach that solar can be used when available to mitigate hydro dam flows thereby utilising their significant storage capacity as a virtual battery. Simeon absolutely refuses to recognise this potental, instead doubling back on his claims that gas powered thermal generation is the only option NZ has to address the current generation shortfall.

It must also be kept in mind that the way our electricity supply system structured the wholesale price is calculated every 30 minutes based on the most expensive generation method being used at that instant which in the case of peak loading is thermal gas or coal fired. That rate then applies to all generation being used at that time so is effectively a huge windfall for the hydro generators whose cost of generation is far less than what they can charge on the wholesale market. Yahoo... money in the bank! The strategy that Simeon Brown is proposing by pushing for thermal generation including by the use of even more costly imported LNG will effectively lock NZ consumers into higher prices for longer. Again this is an added windfall for the existing gentailers as well as restricting the viability of solar and wind capacity by the smaller players, who are stuck with selling their generation into a market biased by the huge advantages being enjoyed by their competitors and potentially onsellers of that generation.

The system is well and truly broken and based on Simeon Brown's utterances in this interview it is unlikely this government will do anything to improve that situation.

Hmmm....we know that some MPs seem to have signed up to support their donors' agendas. I wonder if simple simeon has been bought by someone?

Who knows - but it has to be said that this govt do seem very...considerate of their donors.

[Oh_hunnihunni]

It was a fascinating interview. I was yelling at the tv. This government is useless.

[harm_less]

Agree absolutely. I was infuriated by Simeon's ignorance and purposeful refusal to acknowledge any solution other than to increase thermal generation. This government is going all out to maximise their financial returns from all manner of public services and utilities and in doing so screwing over the citizens of NZ whose taxes have built and who have had input into those assets.

Our hydro generation network is world leading but rather than optimise our usage of it by way of its energy storage capacity to buffer more intermittent renewable generation methods he is devaluing it by abusive management strategies incentivised by faulty economic regulation. The opening part of the interview was very telling as to who is in control of NZ's electricity supply sector and therefore who is flatly to blame for the current crisis. The conflict of interest from the incumbent big generators who by Simeon's comments were able to scuttle a long term solution in the form of Lake Onslow is inarguable. Those same forces are now being allowed to keep their boot on the throat of widespread rooftop solar implementation in order to protect their current cosy market position.

The only optimism I have in regard to this situation is that it will ensure the prompt failure of this government, in combination with their health, education, Treaty, social support and other misguided policies. I just hope the country is in a redeemable state once this lot are consigned to the history books.

[Oh_hunnihunni]

That rubbish about the sun not shining was particularly galling. Playing to the ignorant.