Transpower and public ownership

We mentioned before that Transpower was excluded from public ownership.  Today we thought that we might offer more of an inside view as to why this is the case.  

1) There is no current competition for Transpower.  It is a monopoly.  

2) There are large barriers of entry into the Transpower market.  It is hugely expensive to build another national grid.  If one was built it would be unlikely to integrate in with the current network.  

3) Transpower has the right to essentially buy (or lease) land by force in order to build more pylons.  This can be quite controversial at times.  The reason this right is given is because the pylons often stretch over many different owners (generally farmers) and their properties.  If Transpower were to buy 9 of the 10 properties it needed the 10th owner would be able to charge an arm and a leg.  Also the areas of land Transpower builds on are of little use to anyone except the owner and transpower.  (Do you really want a small section of land that is landlocked by one other owner?)  This power is meant to enable transpower to expand the network in an efficient manner.  Would you really want another company given this right? 

All of the above indicates that Transpower is a monopoly and will remain one.  The standard argument for the government to retain ownership of a complete monopoly is that investors will want to maximize returns and this will come at the consumer's detriment. 

The problem with the power companies is that the individual lines companies are monopolies and some of them are privately owned.  Whilst the privatization of the power companies may make them more efficient (if you accept John Key's argument) the inefficiency of the lines monopoly's will remain and this will mean that overall all consumers are worse off. 

Hopefully this doesn't happen. 

Government may privatize electricity

From Kiwiblog

For all these reasons, the Government has asked Treasury for advice on the merits and viability of extending the mixed ownership model to four other state-owned companies – Mighty River Power, Meridian, Genesis and Solid Energy.


 Mighty River = Mercury,
Solid Energy is a coal producer.  


Essentially the National government is saying it may (will) privatize the electricity industry.  The notable exception is Trustpower, and we'll probably talk about that later.  


The reasons given seem to be:
1) We think the company will be better run.  
2) It will free up capital for the government.  


Point 2 is outside the realm of this blog and is political.  


However the first point is mentioned as follows


 that the company reaps the benefits of sharper commercial disciplines, more transparency and greater external oversight.


John Key used Air NZ as the example of why this method will work.  The questions is will this happen?  We think that the comparison with Air NZ is not the best analogy.  Air NZ has real competition, Quantas, cruise ships, Air Chile, etc.  
To make the Air NZ analogy it's like having a law in New Zealand that all airliners flying in and out of Auckland Airport have to use Air NZ planes.  


In New Zealand all electricity companies have to use the area lines companies and Trustpower.  So opening up the retail market may just be short sighted.  We've mentioned the role of lines companies in price rises before.  So opening up the Power Companies to individual ownership may not change this at all and the lines companies may stay the same keeping prices rising.


Also true competition only exists when there are alternative suppliers supplying identical products, but also when there are alternative suppliers supplying alternative products.  For domestic travel you can fly Air NZ, fly Quantas, drive, rent a car, take a bus, etc, etc.  
.  
If you want your computer to run you need electricity.  You really only have a handle of options all of which involve a traditional electricity company.  


For this reason we feel there is a much greater risk of the Power Companies just continuing with business as normal. To recap this is for two reasons
1) The same dependence on lines companies and Trustpower.
2)  The lack of real alternatives. 
A better analogy would be telecom.  It has been twenty years since telecom was privatized.  Real competition has only just started.  The service you get from telecom is universally condemned and the company itself is open to vilification.


The reasons are the same, all of the competition had to depend on the telecom lines (at least at first) and if you wanted to talk with other people for years there were no other options.  (Now there are mobile phones, landlines, and skype).  


We will of course be watching closely to see what happens.

Update on our last post

Our last post elicited a response from Genesis Energy.  This clarified the situation

1) The price rise was in Waitemata only (West and North Auckland).
2) The particularly low night rate (that affected 850 people) was actually a rate that should not have existed.  It appears we were wrong in suggesting it was the rate of a neighboring lines company.

Also they made a mention that no fish would have floated to the top of the Waikato river. They said they employ a person full time to ensure that the temperature of the river doesn't reach over 25 degrees.
They actually adjust production of electricity on a half hour basis depending on what the projected temperature of the river is likely to be.  

So apparently there are controls in place to prevent fish from dying, and we must have misunderstood our information.  Perhaps our source of information meant that if the turbines weren't taken off line the fish would have floated to the top of the river.

Fantastic Cartoon in Today's Herald

If you haven't seen it already, here is a cartoon from today's NZ herald

 

Quite why they are picking on Genesis Energy is beyond me.  All power companies are doing this.  Cartoon found here.

Genesis Energy's electricity price rise

The NZ Herald reports that Genesis Energy is increasing it's prices by as much as 20%.

Well.... sort of.

1) If you are one of Genesis Energy's 62,000 customers (which is 9% of Genesis Energy's customer base), your power will be going up 3%.  This sounds like a lines company price rise, which we have blogged about before.

2) There is a sub issue that 850 of these customers (so about 9% of the 9%) were being billed incorrectly.  This lends creditability to the theory that it is a lines company rise.  It looks as this 9% of the 9% were on the incorrect lines company charges, and are thus being increased.

3) It's a little bit unclear as to how much the nigh rate is rising by.  The story doesn't tell us whether the true pre rise rate is 10.37c or whether that was the cheaper rate the 850 customers were on.  Irrespective the 18.56c for night rate is now almost 75% of the average cost for a standard rate.  This deserves another blog post.

But I'll go back to the point we've made, power prices are just going to go up and up and up.  To reduce them you have to take action.  We recommend purchasing Power Panda products, but then we are biased.

Genesis Energy emails customers incorrectly

Burried in our papers is the admission that Genesis Energy incorrectly estimated it's customer's electricity consumption.  The story is that Genesis Energy when reviewing it's customer's accounts sent out the incorrect information to 13,800 customers.

There are a few interesting things that this story raises:

1) Genesis Energy contacts every customer every year with this right plan promise.  I thought that it was an automated process.  What makes this mailout different?  Does Genesis Energy design the formulea each time it performs this right plan promise? 

2) A partial solution is found in the words the computer "failed to pick up different power-use figures."  Which suggests to us that maybe it's the fact that most of these customers had advanced meters and so something in the transfer happened that the automated system didn't correctly calculate the usage.

3) I really want to know how the problem was picked up.  How was it picked up half way through the mail out? 

4) Genesis Energy thinks that the average powerbill is about 8400Kw which equates to $2467.67 on Power across an entire year.  This means that that the average person will save $500-$750 a year with a Power Panda.  Excellent new.

Taking the Huntley Power Station offline

We've been informed that the Huntly Power Station is now only running one of it's six turbines. 

The reason for this is that like all Power Stations Huntly heats water into steam and uses this to turn turbines.  The heated water at Huntly is then discharged into the river. 

This is why you'll find power stations along rivers. 

However due to the summer temperatures the hot water got even hotter. 

This is fantastic news if you live in Huntly and like to swim.  It's less good news when you consider that fish started floating to the top of the river and algae started growing. 

So five of the turbines were taken offline. 

This story again illustrates that due to the very small New Zealand economy very small changes can have large changes in our electricity industry. 

Of course this sends the price of electricity up, and hopefully this cost will be worn by Genesis Energy.  Hopefully it won't just increase it's electricity charges.

The Power Panda Savings Device (and other names)

We thought it would be a good oppertunity to talk about the various names that the Power Panda went through before lauching it to the market. 

Initially the name was "Electrical Savings Device".  This was boring, and unmemorable.  However whilst we did your trials in homes this was still the name we called it. 

We toyed with the idea of calling it "Green wire Savings Device" on the theory that using less electricity was green.  This was abandoned when we realised that there was a web and graphic company by the same name in New Zealand. 

The name "Kiwi Power Saver" was also considered by rejected because we wanted a more generic name as it is our eventual plan to sell the devices outside New Zealand. 

The next idea was to call it the Power Panda Savings Device.  We wanted the name to imply that it reduced the cost of electricity.  We selected the Panda because we wanted to convey the massive savings the device would provide, and also we feel that Power is valuable and becoming more and more rare (like the panda). 

However that name was  too long and we shortened it the Power Panda.  (Which is why our website is http://www.thepowerpanda.com/ )

However when we launched the Total Saver some people have become confused between the two products so we may appropriate a title to the hot water device that indicates it only works with hot water. 

Hopefully that's been helpful and we'll be back talking about the electricity industry tomorrow.

Fantastic Sucess Story from the Total Saver

We just had a business owner call us back today about the Total Saver we installed for him last month.  He was one of the customer's that preordered their Total Saver. 

He'd saved 56% on his electricity invoice.  Which is better than we advertise. 

To be fair he's taken some of the other steps our sales agent suggested in reducing his electricity bills, but this business has just halved one of his major costs. 

He's absolutely rapt! 

Which is good because our Sales Manager was having a little bit of a difficult day (for personal reasons) and it means he gets to go home smiling. 

Change your Power Company - The Service

Sometimes representatives from Power Companies will attempt to get you to change your electricity account to them because "They have better service."  This is a ... bit of a stretch often.

Large companies hire large call centres.  This means that you are likely to get through to someone quicker.  (Mercury energy aside, their wait times are incredibly long).  However it does mean you'll never reach the same person twice.  Often in large call centres people do feel like 'bits of the machine'.  People will often treat you like a moron and generally the centre is so vast the representative often doesn't know everything and gives you half truths.

Small companies however often have longer wait times.  The reason for this is if they have 50 call centre staff, and a flu goes around and only 40 people turn up for work then you will wait 20% longer.
However small companies generally have more experienced people as the people know more about the business and how it works.

If you want to test the Power Companies service I would recommend calling their contact center and saying your electricity is off.  How they treat you is probably an indication of their service.

Don't trust the sales person, always call the contact centre first.  (There is a reason nobody at the Power Panda is with Mercury.  Just saying).

Mercury Energy's three (3) year fixed price plan - another take

We've blogged about the reality of Mercury Energy's fixed price plan previously.  We wanted to put this in another light.
Assuming you have a $300 power bill.  The additional 10% you pay in the first year will equate to $360.
For a small amount more you could purchase a Power Panda and see power bills of $200-$240.

You can purchase a Power Panda by calling 0800 72 83 44 or by visiting the Power Panda Website.

Just you know, another way of thinking.

(Also see our latest post on this fixed price plan and some of the interesting things relating to it.)

How to find your ICP #.

ICP (Installation Control Point) is a unique number that is assigned to every place where an electricity line comes off a power pole.  ICPs are 15 digets longs and are a combination of letters and numbers.
Everyone in the New Zealand electricity industry uses them.
There is a national database of them.
When you are moving property and your electricity company is unable to locate the correct ICP# they will ask you to confirm the ICP#.

Slight problem - unless you know everything, you won't know this.  And attempting to find your ICP# can be frustrating.

Your Power Company will suggest calling your landlord/real estate agent.  I can tell you that 9/10ths of the time these people just won't know.

Option 1) (The Long Option), locate your meter, write down the printed serial number on your meter and call every electricity company and ask them to locate the property.  Most will be able to search via meter serial number.  This process can take a while.

Option 2) Wait until correspondence from an electricity company arrives at the property, open it, and the ICP# should be located on the letter.  WARNING: the company who currently supplies electricity may turn the electricity off so this is a dangerous method.

These are the obvious solutions.  Some of the more ... round about ways will be discussed at a later date.

More about the Power Panda Total Saver

We've mentioned the Power Panda Total Saver before.  We thought it would be a good time to explain some theory of how it works.

Electricity is made up on two factors, voltage and amps.  Both of these are produced in sine waves, and should ideally look like this:

However, when these are fed through electricity lines, distortion happens. A  good way to explain this is, if you were to make a cell phone call in an area of bad reception, all of your voice enters the phone, but in the process of going to the receiving phone it  breaks up. 

With the distortion, the electricity looks like this:

 What the Power Panda Total Saver does, is to put the voltage and the amps back together making your electricity more efficient. 

That in a nutshell is the idea of the Total Saver.  We'll expand more on this in coming weeks.  There are a few other aspects of the Total Saver, but this is the underlying idea.  

What to do if you decided not to switch power companies.

Sometimes the situation occurs when you start to switch Power Companies and then realize that you have made a terrible mistake.  It's okay, don't panic.  Call your old Power Company and tell them that you do not want to switch.  You have about 2-3 weeks to do this.  If you call during this time your old Power Company can stop the switch and everything stays the same.
After 3 weeks you generally have to switch back, a process that takes another 2 weeks.

EXCEPTION - If for any reason any Power Company switches you without your consent your own Power Company can change this.  This can happen for a number of reasons, the sales agent is perhaps less than honest, or your neighbors have accidentally signed up for electricity for your property, etc.  Your Power Company can correct this at any stage, but it can often mean that you miss and electricity invoice and 'catch up' the next month.

Are you considering changing your Power Company?

Are you considering changing your Power Company?  Maybe someone has knocked on your door offering you cheaper power, or maybe somebody has called you (usually at dinner time) asking if you are satisfied with the service you receive from your Power Company.

Should you switch?  That is the $150 (more or less, often less) a year question.  We can't answer that question directly for you but we can give you some advice.

1) Ensure that you are on the best plan with your current electricity company.  Every power company has two plans, a low user, and a high user plan.  Your plan is generally calculated on your yearly usage.
HOWEVER - when the salesperson asks you to switch they generally only look at the last electricity bill you received.  Bills in summer are lower bills, bills in winter are higher bills.  What this means is that the sales agent can quote you a rate that whilst it was cheaper for last month is more expensive overall.

2) Ask about fee!  In particular check to see if there is a fee for closing your account.  Check to see if there are any fees (such as bonds) for opening an account.  Ask what the fee is to move, and what fees there are if the electricity has been turned off.  For example Mercury charges an obscene amount when you move property and Genesis doesn't.  Moving twice at $100 a time will make savings disappear.

3) Power Companies give charges depending on how you pay, and discounts for paying in other methods.  Tell the Sales person how you pay your bills, ask them to confirm the price tey quoted and ask if there will be any fees for paying this method.

Hopefully between these three pieces of advice you will be able to see if you change Power Companies or not.

What to do if you didn't take a meter reading when you moved out of your property

We've blogged previously as to why you should always take a meter reading yourself when moving house.
However what should you do if you have left your house and haven't taken a meter reading.  What should you do?

Scenario 1 - It's only been a few days but you can't get back to read the meter.  Solution: You can get a friend/landlord/real estate agent to read the meter and give you the reading.  You can then give this reading to the electricity company.

Scenario 2 - It's been a long time and now the Power Company are calling you due to your overdue account.
At this stage you could lie and make up a reading.  Don't do this, it's generally obvious what is happening and the Power Company will refuse to believe you.
If there has has been a meter reading after you moved out ask to use that reading to close the account.  This means you may have to pay some money but hopefully not so much.

Scenario 3 - You had an advanced meter. Little known fact - AMS (the company that monitors the advanced meters) takes a reading from every meter every day.  Insist that they use this reading.  If the person you are talking to tells you that you are wrong, talk with a manager.  Do no let up until they locate this reading.

Scenario 4 - You posted in the the reading / submitted it online.  We would recommend just not giving in, blame the Power Company, insist they wipe any liability from your last invoice and if the person refuses to budge make a complain.

Hopefully that covers the obvious scenarios, if you think of any more just let us know and we'll try to help.

When your Power is about to go out

This is our last post in our series about electricity cuts.  Sometimes the electricity cuts will be planned.
In this case you will receive a letter in the mail about two weeks before hand saying "Please be advised that your Power will be cut on <date> from <x> to <y> for <reason>.  The backup date is <date2> from <x> to <y>"

Often the reason given is maintenance.

Around 90% of the time the work will occur on the first date.  It will almost always be on by the final time listed. The backup date is listed because if the work does not go ahead on the first date it will proceed on the second date.  The second date is given in case of some reason it cannot proceed on the first date.  Usual reasons are storms, excessive raining, or on emergency that takes precedence over the job.

So what should you do in this case?

To get the outage moved you have to have a really good reason why another date is acceptable but the proposed date is not.  This is generally a large preplanned event that cannot be shifted.  The only time we have seen this type of outage moved is for a wedding reception.
It is our understanding that the outage will be moved to the backup date and you have to be very good at arguing to change this.

In order to achieve this you need to call the person who sent you the letter.  Sometimes this will put you through to a call center, if so you need to ask the person "Do you have the authority to change the outage date?"  when they say "no" ask to speak with the person who does have this authority.

The date will not be moved if the reason you give means that it is impossible to ever do the work.  For example if you say you are on an oxygen machine.  The company will say you are always on that machine and therefore there is no reason the reschedule and advise you to make other arrangements.

In those situations we would advise staying with a friend for the day.  After the first date has past, call up your electricity company and confirm that the outage did occur.  If it did not occur, you will need to spend the backup date with your friend also.

We're not dead!

We apologize for the long delay in posting. We had a very reduced staff from 24 December until today.  In our error we neglected to post this information in late December as we should have.

We are back now and our next post on what to do when the electricity goes out will be up shortly.