Why do I have folk who are not making electricity calling me saying they can supply it
What is their role other than taking a slice of pie we need not give
Who here can explain the system
Who can offer supportfor that system
Do you see a flaw in the marketing of a product not produced by the marketer
It seems wrong and I ask members view..is it just me
I an sincerely confused
Who is eating our pie
What I think I know, and it could be wrong. The electricty retailers are just professional sales and account support organisations and in some cases handle multiple products (like gas). There are a couple of large ones and one of these actually runs different electricity retailer operations out of the same call centre. The person you talk to at say Energy Australia might be sitting across the aisle from someone representing another retailer.
The electricity generators have nothing to do with sales and support of the retail customers. And then we have Ausgrid, and the other Grid providers who only look after the poles and wires.
All of these organisations will want (and achieve) a profit margin. Ths triple dipping is one of the reasons that prices stay high and get higher. The Grid people are notorious for being high cost operations, and in the past the state (at least NSW) paid for a gold standard network upgrade - which of course Ausgrid charges for and the cost is paid for by you (with the appropriate margin of course). None of these organisations are "Not for Profit" despite what Ausgrid might claim, they have to return a dividend to the state. The state is positioning Ausgrid for a privatisation sale (to fund things like road upgrade projects), the unions argue that this will increase costs to you, but the reality is that your costs will continue to rise regardless because they need money to pay for maintenance, their nice offices, all those trucks, the guys standing around, the next round of pay increases for these public sector workers, etc.
As to the money trail from your bill to them, I am not sure who gets what but the retailers are the collection point and then money get distributed to the generator and grid but probably flows through the State to them. I think a call to the NSW Energy Ombudsman's office might give you the answers your after.
The people you pay for electricity have never produced electricity.
Back before the madness (circa 1990) in NSW, we had The Electricity Commission of NSW (who owned and operated the Generators and the Grid (poles and wires) and they also had interests in Elcom collieries to boot.
But the retailers were a mish-mash of "County Councils" who bought electricity from the Commission and on sold it to those in their local area.
With the decentralisation and "rationalisation" of the system (in preparation for selling the whole kit and caboodle to private business) many of these were combined in to a few big retailers, and eventually, they were allowed to contract customers outside their local areas. This then allowed outsiders (like AGL etc) to also buy and sell electricity to customers.
It is all smoke and mirrors, as they do not physically deliver the electricity to their customers. They just trade on a market similar to a futures market where they time their trades to buy cheap and sell expensive, so to speak, and at the end of a contract period they must match out their buys and sells of course (because they cannot produce to make up a shortfall, and they cannot store any excess).
So yes, their are in-operative profit takers getting a piece of your pie, the Govt maintains it will yield more competition and lower prices to the public, ...(no comment).
The contracts offered by the retailers are a scam too as detailed on 'The Checkout' recently. Customers are bound by the agreement but the retailer can increase their prices at any time - Simply Energy did this to me over the last year or so.
Only problem here is the govt desperately need all these middlemen, hence why they keep privatising stuff that really shouldnt be split up.
Just imagine how many of the duplicated CEOs, boards, middle managers, HR, IT depts etc, would end up on the dole if the system went back to an efficient management model.
ie for the Govt, its a simple way of shifting upper middle class welfare costs directly to the public, by ensuring masses of dead wood can make an income without too much effort.
Its worse than holes, its a huge money wasting joke.
I have attached a piccy of what happened to me a year ago.
Some wallah walked down the street with a big pole measuring the height of the power lines coming into houses, ( if they crossed a driveway).
A few days later a big truck turned up and some other wallahs knocked on the door and said they had to turn my power off.
I asked why and they said my current cable ( installed by the SEC about 20 years ago and still perfectly good ) was now no good as it might get hit by trucks.
I pointed out that a truck cant get into my drive
Too bad was the reply, we HAVE to change it.
Welll, they first went to the pole and had to add a special riser as the pole still wasnt high enough . ( Note that even tho the crossbar on the pole is semi rotten, they left it there and just added a few bands around it to stop it splitting when they bolted "their" riser on).
Well after adding their "standard riser" it still wasnt high enough, but as they had no taller risers, they said would have to install a safety switch that disconnects when a truck ( that cant get into my drive ) hits the wire. By now i'm off for wine and popcorn.
Well they did my place and one of the houses over the road and started to pack up. I asked why they didnt do my neighbour at the same time, as she has very old original wiring that is now pretty much illegal.
They mentioned she wasnt on their list as they were only doing non compliant driveways for one supplier, so just left it as is.
I suppose someone will come back at a later date and repeat it all again.
Crazy
A few semi-organised thoughts for anyone with the patience to read them ...
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I've yet to see clearly argued (to my satisfaction) why the grid/poles/wires business needs to be privatised. I see no impediment to privatising its upkeep, but that's a different matter. We do that with much of our military equipment and facilities without suggestion that the assets should be in private ownership (well, not without hysterical laughter from 99% of the audience on the rare occasions that it happens). There are many contract options, including long-term multi-year arrangements, that can deliver value-for-money and retain public asset ownership. Defence has about 50 asset groups, each managed from offices with ~20-70 staff (the newer the capability, the leaner the management, generally speaking) with the vast majority of the work done in the private sector. That's getting up toward the order of $100 billion in assets with ~2500 public-sector staff (with the rest of the 6500-total DMO workforce in enabling areas and new projects). I expect the grid/poles/wires business would be leaner, if it's done right, but it isn't at the moment. Energex, for example, operating in SEQ, has 3,000 employees alone, but it does much (all?) work in-house. I don't doubt that poles/wires maintenance could be better done, but I don't see how privatisation of assets will deliver that result.
Generally, I don't believe that privatisation of a natural and actual monopoly is in the public interest (although there may be an example somewhere). I don't believe selling Telstra's network assets was right, either. Privatise the upkeep, sure, with carefully structured contracts, clever payment incentives and diligent contract management, but don't sell the assets. Mind you, we got into a heck of a mess with duplicate HFC networks in some areas, none in others and a mix of over- and under-serviced regions. I won't try and make the case that Telecom/Telstra has ever done a superlative job at planning and managing the copper and HFC networks.
Power generators, on the other hand, can be privatised left and right without issue. In fact, I'd say that's optimum. Generation technology changes at a much faster rate than transmission technology (with serious cost implications) and it looks to me like a natural fit for market/private enterprise mechanisms. The part of the grid from generator site to feed-in point can be theirs, too - no problem there.
The current pricing model, that dominates retail prices, includes the problematic 10%-on-cost component for grid maintenance/upgrades, AFAIK. Somebody, somewhere should be feeling guilty that they signed up to that. But it mystifies me that, rather than revisit contract and pricing models, or even standards and independent audits, privatisation of assets is suggested instead. Our leaders seem to want to over-simplify the problem, and therefore apply an overly-simplistic, flawed solution. Or maybe they're just driven by budget numbers and to hell with long-term solutions. The network business actually delivers a profit to Government as it is - it's not losing money.
As for retailers, right now, we could conceivably do without them - just add the network cost component and percentage markup to wholesale prices for the generators, which is kinda what we do already. We basically swapped councils for a mix of public and private retailers without changing much else. The retailers are probably too constrained and I think we'd benefit from more competition in that sector. There's a small efficiency in having private retailers - they can "bundle" prices based on usage/demand and are free to create innovative supply contracts (although they don't right now) - but their real value is in dealing with the generators and the base/spot markets so you, the consumer, don't have to. For that reason, I think centrally-regulated time-based network charges are a slap in the face as they relieve the retailers, network operators and generators of organising themsleves and offering incentives to best meet or modify consumer demand. Time-based charges are fine, but only so long as they reflect actual costs, there is competition amongst retailers to offer a variety of solutions and consumers have free choice amongst retailers.
Regulation in the sector seems patchwork and half-arsed. I think it could do with a top-down overhaul. But selling monopoly assets is not the answer, IMHO.
On a related point, as I recently read, there continues to be strong growth in micro-generation (mostly solar), with the point of generation generally moving closer to the point of consumption. The long-distance HV network is of decreasing relevance in that environment, but will still be needed. I don't think the recent investments are completely wasted as de-rating is one way of extending asset life (which is to say that upgrading without increasing load achieves the same effect).
Quote:
Originally Posted by AndreJ
as they were only doing non compliant driveways for one supplier
I've seen similar stuff ups around my place, but I don't understand the supplier angle. Did they mean retailer? Surely the poles/wires in your area are all operated by the same entity?
The surveys these people do are haphazard - I've seen it myself. There doesn't seem to be any real quality control. I can go back to the military example I began with and say that heads would roll if military asset management were that disorganised.
I've seen similar stuff ups around my place, but I don't understand the supplier angle. Did they mean retailer?
Not 100% sure as they had no real idea, just they were contracted to do it, and as my neighbour was excluded, it seems to be related to who you pay your bill to, not necessarily the local poles and wires mob.
Ie, as i understand it, Melbourne has five large areas allocated to five companies for "poles and wires", then retailers feed off/across them.
In some cases, the same company that has poles and wires also has a retail arm.
I know that cos i have had several conversations with people trying to churn me off the retailer to the parent company.
Its just a ratsnest of overpaid managements trying to make a profit for their localised entity.
Thank you Astro Bot for such a well considered
Follow the money
Systems must result from some one presenting them as good
Good for who
Follow the money gives our answer
The people you pay for electricity have never produced electricity.
Back before the madness (circa 1990) in NSW, we had The Electricity Commission of NSW (who owned and operated the Generators and the Grid (poles and wires) and they also had interests in Elcom collieries to boot.
But the retailers were a mish-mash of "County Councils" who bought electricity from the Commission and on sold it to those in their local area.
With the decentralisation and "rationalisation" of the system (in preparation for selling the whole kit and caboodle to private business) many of these were combined in to a few big retailers, and eventually, they were allowed to contract customers outside their local areas. This then allowed outsiders (like AGL etc) to also buy and sell electricity to customers.
It is all smoke and mirrors, as they do not physically deliver the electricity to their customers. They just trade on a market similar to a futures market where they time their trades to buy cheap and sell expensive, so to speak, and at the end of a contract period they must match out their buys and sells of course (because they cannot produce to make up a shortfall, and they cannot store any excess).
So yes, their are in-operative profit takers getting a piece of your pie, the Govt maintains it will yield more competition and lower prices to the public, ...(no comment).
Besides the traders making an obvious profit out of what I thought was a commodity such as water, who else benefits off the current system?
And we are told we need to get more efficient so we can compete in theworld.
Of course those calling for such improvement blame those dam wage earners for getting high pay and benefit
Er if commodity prices etc not inflated due to pay middle men mentality would unions demand less.
I demand a white paper green paper or do it on the cheap paper reviewing inefficiency in our economy
I assume lower energy cost would help manufacturing more competitive
Could such help exporters those folk who ultimately provide our income
But it's not broke don't fix it and we have always done it that way and no that would put folk out of work that doesn't need to be performed
So let's just blame the poor no good bludgers feeding off us righteous ruling class
Besides the traders making an obvious profit out of what I thought was a commodity such as water, who else benefits off the current system?
The energy market is made up of three different tiers and the Market Manager:
Generators – power stations, they generate most of the energy that we use in Australia and release it to the national electricity market (managed by NEMMCO) where it is pooled and bought by electricity suppliers and companies who are responsible for ensuring they buy enough energy to supply their customers like you.
Distributor(s) – (currently Transgrid) own the power poles and wires and ensure that your power is physically delivered to your house or business. Your electricity bill (from your retailer supplier) includes a daily "Supply Charge" that they will pay to the distribution company.
Retailers or Suppliers – measure your electricity consumption, bill you for the electricity you consume in your home or business, and then "buy" enough power from NEMMCO to cover your consumption.
NEMMCO’s role is to facilitate trade between the generators and the retailers. These activities include establishing electricity demand levels, receiving "bids" (for each hour of the day I think) to supply electricity from generators, scheduling (winning bids) of generators, dispatching generators into production, calculating the spot price of electricity, measuring electricity use and financially settling the electricity market.
They aggregate electricity produced by generators into a pool, and
the retail suppliers purchase their electricity needs from the aggregated supply. Market forces determine the level of electricity traded and the cost characteristics of that trade. NEMMCO, in turn, pays the generators the spot price for the electricity they supply to the pool.
The generators will determine how much power they need to generate to satisfy their winning bids on an hourly basis. For example Macquarie Generation have 8 units (4 x 660 MW units and 4 x 500 MW units). They will not usually have all running at any given time depending on how much power they have bid to provide (and "won"). [Other NSW Generators, Delta and Eraring, have similar or slightly less capacity]
So if NEMMCO decides it will need say 8,000MW for a particular hour, MG#1 may bid $100, MG#2 may bid $200, Delta#1 $125, etc. for each unit. NEMMCO accepts bids from lowest until it reaches its target. BUT Interestingly, the LAST winning bid sets the price for the ENTIRE market for that hour, and I think can get up to $10,000 per MW.hour. [So if someone's unit crashes, the cost to get another idle unit up and running can be significant.]
The Retailer (being exposed to this variable spot price) covers itself by buying futures and other "Derivative" products.
And, None of this mentions the coal companies that make up the majority of the cost of producing electricity. And remember, The Electricity Commission used to owned Elcom / PowerCoal Collieries, but sold them off too.
Thanks for that Allan. That sounds extremely convoluted under the hood. I had no idea. Not surprised we're paying through the nose. Doesn't sound like it will get any better. Too many cooks in the kitchen getting fat.
the national electricity market (managed by NEMMCO)
I thought Nemmco was killed off and replaced by a whole new set of bureaucrats??
And just googling it, i see Nemmco appeared to die 5 years ago
and was replaced by this mob http://www.aemo.com.au/
I see SA is paying quite a bit for their sparks at present .
The whole system has been taken away from engineers/managers who just made it run, and given over to bankers and fortune tellers ( traders ).
I thought Nemmco was killed off and replaced by a whole new set of bureaucrats??
And just googling it, i see Nemmco appeared to die 5 years ago
and was replaced by this mob http://www.aemo.com.au/
I retired a few years ago now, so you are probably correct.
Apologies for any erroneous content, but the principle still operates the same I believe.
Quote:
The whole system has been taken away from engineers/managers who just made it run, and given over to bankers and fortune tellers ( traders ).
. ( Note that even tho the crossbar on the pole is semi rotten, they left it there and just added a few bands around it to stop it splitting when they bolted "their" riser on). 
.
