How to Save Power at Home, Part 1

Dear Reader,

A great many apologies for not posting last week; I'll try to be a bit more on-the-ball.

Now I'm sure you've noticed that I've been telling you quite a bit about new technologies that might hit our shores... a long time from now. Which is interesting and all, but not overly practical. So, I'd like to give you a bit more down-to-earth information, particularly on ways to save power.

Now, some of things I'm going to cover in the next few weeks you're probably already doing; but you probably don't have much of an indication of exactly how much you could save if you were doing them, and whether it was worth making the changes to get the savings (if changes needed to be made).

But, before I can get into all that, I need to show you what assumptions I'm making:

1. The power bill is $250 (if your bill is smaller, find out how much smaller by percentage, and apply that percentage to the amounts I work out).

2. You're being charged a flat-rate of 20 cents per kilowatt-hour (kWh); I'll write cent amounts in dollars from now one, i.e., 20 cents is $0.20.

3. The bill spans for 30 days.

4. Water flows out of the tap at 10 litres per minute (don't worry: this'll be relevant later).

5. Water flows out of the shower-head at 14.5 litres per minute (also relevant, but later).

6. Hot water heating accounts for 30% of the bill (based on what the EECA Energywise website says).

7. Space heating (heating done to heat rooms) accounts for 29% of the bill (see the Energywise website).

8. Lighting accounts for 8% of the bill (Energywise again).

OK, now that we have a groundwork done, let's have a look at lights.

I'm pretty sure you've guessed that I'm going to tell you to change to those cork-screw compact fluorescent lights - and I am.

But you might not know why, in the first place, the old incandescent light bulbs use so much power; well, around 98% of the power they use is actually converted into heat!

This is because they have to run electricity through a very thin bit of wire that has to heat up until it's white hot. And, it takes a lot of power to become white hot (go figure, eh?).

So, how much would you save?

75% on the lighting costs, and about 6% on the overall bill.

The reason for this is because the fluorescent light bulbs use about a quarter of the power used by the incandescent light bulbs.

Here are the sums:

15 x 60W incandescent light bulbs x 4 hours on a day x 0.2 x 30 = $21.60 every month

15 x 15W fluorescent light bulbs x 4 hours a day x 0.2 x 30 = $5.40 every month

And to work out the savings we go: 21.6 - 5.4 = $16.20

And to work out the difference it makes to the overall bill: (16.20 / 250) x 100 = 6%

OK, 6% isn't huge, but they'd pay for themselves in 4 months, since:

(15 x 8.99 (the cost of a 2 pack)) / 2 (since they come in a 2 pack) = $67.43

And to work out how long it'd take, we divide the cost by the savings: 67.43 / 16.20 = 4.14 months.

4 months for it to pay for itself? I'd say that's pretty good.

Next time, I'll have a look at why the fluorescents give off a funny light, and what you can do about that. And I'll have a look dangers they could pose with the mercury they use.

Yours sincerely,

Andrew Greaves

How to Charge Your Car for Free

Dear Reader,

Yes, charge your car for free by using the sun.

Of course, you'd have to own the i-MiEV (said 'eemeeyev' in a drunk Russian accent) - a little electric car. But, SolarCity is offering to install a solar generation set-up to power it - which results in the car not running up your power bill.

So, not a bad idea, except that the solar set-ups start at around $9,999; and, the amount of sunlight the solar panel would get is probably a lot less than what they reckon it could get (so you might have to get a few more than they say).

But I really do like the idea of an electric car not using your electricity.

Yours sincerely,

Andrew Greaves

Watch Those Smart Meters!

Dear Reader,

Yes, beware! Allow you to monitor your power usage they would, but there are a few things to remember if you're looking at having one installed:

1. Not all smart meters are compatible with other power companies' technology.

Bit of a problem if you want to change power companies, eh?
Also, if you were to get a smart meter, then change power companies, the new power company might not have smart meter technology, so you'd have to go back to estimates.

2. You may have been undercharged (and they'll want back pay!)

To be fair, if you were undercharged, you should pay up - but it's hard to feel any sympathy for the power companies, isn't it? Just be aware that you could be lumped with an amount you hadn't bargained for.

3. Be wary of dangerous CRS (Contractor-Related Shoddiness).

Remember, this is stuff to do with electricity, so the last thing you want is someone doing a shoddy job! If you have a reliable electrician, and you're a bit wary of the job done by the contractor installing the meter, get your man to have a look at it.

For anyone that has changed over, or is thinking of it, know that you can lay complaints with the Electricity & Gas Complaints Commissioner.

So, now I'm sounding like a complete gainsayer; but I'm not against installing a smart meter, since you can monitor your power usage pretty accurately - which is superb if you want to know what you should turn off or use less of.

Just saying, weigh up the costs.

Yours sincerely,

Andrew Greaves

How Your Shoes Can Charge Your Phone

Dear Reader,

Yes, the scientists over in America are developing a shoe that's able to charge your phone! Imagine that: you get a call, knowing that your phone is probably going to cut out halfway - so you plug it into your shoes, and go for a walk around the office.

It might be a great nuisance to your co-workers, but I think it's a pretty clever idea.

So, how does it work? Well, that's quite interesting: there's a little technique called 'electrowetting', where you can get a liquid to wet a previously unwettable surface by charging it with an electrical charge. You can see it happening here.

It's been discovered by some clever man that the process can work in reverse, i.e., deform a liquid used in electrowetting, and it'll generate a bit of electricity.

The problem right now is that that bit of electricity is a bit too small to do anything with, but he reckons he can get it to be a big enough bit of electricity to charge a mobile phone (or even a laptop).

It may even have defensive capabilities, like running away from a mugger for 5 minutes, then giving him an electrified boot in the shins - no, that's close to impossible, but it'd be funny alright!

Yours sincerely,

Andrew Greaves

How Optical Illusions Can Help You Save Power

Dear Reader,

From the scientists over in America, a way has been suggested that would allow us lowly power users to save power through optical illusion.
The way? Create a length of tape with numbers on them that fits neatly over the meter, so that the meter reader's optics are illusioned...

Just joking - don't go reporting me, thanks. No, the real way is far more interesting. It goes something like this:

All your light bulbs are run on AC electricity, which means that they 'flicker' (sort of). The reason for this is because the current goes one way, stops, goes the other way, then repeats - meaning that the light, at some point, turns off. Sort of.
I don't want to get too technical, but the point is that it 'flickers' at such a high rate (60 times a second) that we don't even notice it.

Now, what they want to try and do is keep it on for 70 milliseconds, turn it off for 10, then turn it back on. Basically, this alters the 'flickering' so that it stays off for a bit longer than normal - about 12.5% longer - and you wouldn't even notice it.

And this 12.5% translates into 12.5% savings. Sort of.

Why all the sort ofs? Well, it's difficult to get reliable testing out of optical illusions because people's brains respond differently.

Anyway, onto the figures: the EnergyWise website reckons that 8% of the bill goes on lighting. So, in a bill of $200, you'd be spending $16 on lighting.
If you were to save 12.5% on that, you'd have saved yourself a great big $2 a month!

Well, it's a bit underwhelming, I suppose; but now you can go and give an interesting little tid-bit to your mates.

Yours sincerely,

Andrew Greaves

How to Illuminate Your House (Cheaply) Without Looking Dead

Dear Reader,

Just recently, I had a look at a light bulb that would save as much power as those compact fluorescent light bulbs, without the peculiar attribute of projecting light that made people look dead.
You see, at my age, you become quite concerned when you see yourself in the mirror; and even more so when you're lit up by fluorescent lighting!

Anyway, they work along the same lines as Cathode-ray tubes (have a look at my newsletters, where I go into a bit more depth about that), but without all the nasty x-rated-rays; apparently they also shine in all directions (as opposed to in beams), the light's a bit warmer, they don't contain mercury, and they reach peak brightness a lot faster than the compact fluorescent light bulbs.

They're also said to be better than LED light bulbs because they don't have a sharp peak in the blue section of the light spectrum - this is good because blue light might be damaging to the eyes. But, I'll go into that more a bit later on.

So there we have it: a new competitor that gives light that makes things look like they're illuminated by incandescent bulbs, with the lifespan of fluorescent bulbs. Be one to look out for, I reckon.

Yours sincerely,

Andrew Greaves

3 News Pieces Tenuously Related to Power

Dear Reader,

As the title suggests, I found a few nuggets of interest; and yes, they are related to power (sort of):

First, BP has brought its petrol prices down a sliver to $2 (or thereabouts); marvelous, I said!
At least, I thought so until I remembered that a few years ago they were closer to $1; I suppose it's a little like being happy about tax rebates until you realise that the money was yours to begin with.
Anyway, how are the petrol prices related to power? In a few ways, actually: petrol prices might mean lower power bills, i.e., doesn't definitely mean lower power bills. This is because it has the potential to cost a tiny bit less to run the various machines (possibly through lessened oil and diesel costs).
Don't hold your breath though: I'd say that this is more like one of those things where the change only happens in one direction, i.e., when petrol prices go up, power becomes more expensive, but not the other way around.
Still, that's a bit of extra money in the pocket.

Secondly, Wellington homes seem to have benefited from a bit of extra insulation, thanks to, in part, EECA grants. Having had my own home retrofitted with insulation in the roof and under the floors, I can say it makes one huge difference: now there's actually a point using heaters, because the warmth doesn't escape the instant it comes into contact with the ceiling!

Since I'm a bit of a figures man, though, I'll give you a few percentages to consider:
Installing insulation in just the floor and ceiling keeps up to 50% of the heat in; so, assuming that 50% less heat-loss translates to 50% less heater usage, you'll be saving about 14.5% on the overall bill - if we go on the EECA's figures.

To get more details on how to make the most out of heating, though, sign up to get my free newsletter.

Thirdly, an author over at Scientific American has taken it upon himself to review 20 applications for the iPhone; and what do they do? Determine the amount of tilt your solar panels need to get the maximum amount of sun for power generation!
Well, I think it's quite impressive. It also means you can really interfere with the work of the guy trying to adjust the solar panels.

Yours sincerely,

Andrew Greaves

9 Reasons for Climate Unchange in New Zealand

Dear Reader,

Just yesterday, the New Zealand Climate Science Coalition released an article giving 9 reasons why a paper published by the climate research arm of the National Institute of Water and Atmospheric Research Ltd (NIWA) is defective:

• It runs counter to all the historical records regarding “NZ average temperatures,”, including those compiled in 1867, 1920, and 1964. The archive shows that current temperatures are slightly cooler than those of 150 years ago.

• Its trend outcome is heavily influenced by data from Auckland and Wellington stations which are declared in the peer-reviewed literature to be contaminated and to show false warming; and it fails to adjust for UHI at any of the six non-rural stations.

• It uses adjustments derived from comparisons between “isolated stations” in direct defiance of the scientific authorities.

• It radically departs from the statistical techniques laid down by its chosen precedent, Rhoades & Salinger. Correctly applied, those techniques demonstrate that New Zealand has experienced no material warming trend during the past century.

• It does not disclose the uncertainties (margins of error) associated with any of its adjustments; and statistically insignificant changes are applied.

• Its high warming trend is created by implausible accumulating adjustments, which lack the random spread and self-balancing effects described in the literature.

• Its sole corroboration, the 11SS, is driven by missing data and is demonstrably flawed ; it serves no purpose other than to damage NIWA’s credibility.

• Recommendations from station reports by the Australian Bureau of Meteorology (BoM) were apparently ignored. The pervasive secrecy surrounding all of the BoM review documents casts doubt on the process.

• Most of the warming in NIWA’s graphs occur during the first half of the twentieth century. This pattern is at odds with NIWA’s official advice that warming was driven by global CO2 emissions – which are concentrated in the last 40 years.

So what?

Well, have a look at the last point about CO2 emissions: "This pattern is at odds with NIWA's official advice that warming was driven by global CO2 emissions". If there's no CO2 emissions-driven warming, there's probably no justification for the Emissions Trading Scheme. Although, this was alleged yesterday too.

I'll keep my eyes peeled for any updates. If it's true, I should hope we don't see a significant rise in power prices either; that'd be nice.

Yours sincerely,

Andrew Greaves.

Meridian's Solar Promise

Dear Reader,

Meridian has jumped on the 'Solar Promise' bandwagon. 'Bandwagon' may carry a few negative connotations, so let's just call it a wagon.
What does the Solar Promise wagon promise, then? It promises to allow individuals and companies to promise to get their friends, family, and customers to promise to take a serious glance at installing solar heating.

Jokes aside, it's actually an initiative begun by the Nelson City Council, et al, to make solar energy more affordable; and they've done this by introducing a rates-based financing scheme (that should give one cause for further investigation), and waiving solar resource consents; well, I certainly like the last one!

Being the calculating type - don't frown like that: I meant the type that likes to do calculations - I liked that they included a few figures on the website, that is:

1. that power bills have risen by 78% in the last 8 years; and,

2. that solar water heating can reduce the costs of hot water heating by 75%.

Now, for the calculations: from 2, then, you would end up saving about 21% on the overall bill (assuming 29% of the bill goes to hot water heating costs). So, if you've got a power bill of $200 per month, you'll be saving $42 per month.

Seeing that a hot water heating system costs between $4,000 - $8,000, it'll take between 8 - 16 years to recoup the cost on a money-saved-because-we-don't-have-to-heat-so-much-water basis alone - provided the power bill stays the same.
If, however, the power bill goes up another 78% in 8 years, at a rate of 9.75% a year, the cost'll be recouped within 7 - 10 years.

So, is it worth it? Well, I'm not your accountant. But, if I was, I'd say that it depended on what your goals were, and what kind of term for fulfillment you'd be happy with. Aside from that though, a solar hot water heating system would add a bit of resell value to the house.

Yours sincerely,

Andrew Greaves

Mercury's 62 things that use power

Dear Reader,

Yes, Mercury has issued a - possibly - quite helpful list of 62 things in the home, and how much power you'd expect them to use per hour. Well, how much they'd cost to run per hour.

A couple of assumptions that you need to be wary of, though, is that they assume you've got a rate of 20.14 cents per kWh, and that you're running your appliances constantly.

I find it strange, however, that they haven't included the cost of running the hot water cylinder, since they've pretty much got everything else (even what's in the kitchen sink!).

So I'll show you how you can work out what your hot water cylinder should be using. First of all, we need the 'water heating calculation', which is:

(3.966 x (number of litres of water that needs heating) x (difference between start and end temperatures)) / 3.41

This will give us the number of watts we'll need to be able to heat the specified amount of water in one hour.
To find out how many hours it will take if we have a limited number of watts available, we divide the number of watts we'll need by the limited number of watts.

O.K., let's get into the examples:

Let's say you need to heat 135 litres to 65 degrees from 10 degrees, and that you have a 3,000 watt element to do it with. By the way, this is pretty much the standard set-up of residential hot water cylinders.
Anyway, let's plug these figures into our equation:

(3.966 x 135 x 55) / 3.41 = 8,635.645 watts needed to heat that amount of water in one hour.
But since we only have 3,000 watts, it'll take 2.879 hours, since:

8,635.645 / 3,000 = 2.879 hours

So, how much will it cost? Taking the amount Mercury gives us, we'll turn it into a dollar amount, and multiply it with the number of hours taken:

2.879 x 0.2014 = 58 cents every day - assuming the hot water cylinder only needs to be heated once (and it might just need to be heated once, depending on how much hot water gets used).

To find out what you should be paying to run your hot water cylinder, find out what size the element is, how many litres it holds, and what the temperature is at the cold water tap (if you're having a bit of trouble, contact us on 0800 72 83 44). Then multiply it with the rate you're getting for the hot water cylinder (which is probably on a controlled rate, i.e., you're paying less for it); you'll probably quite surprised.

Geothermal Heatpumps

My dear reader,

You've read right: if you live on the edge of a thermal vent - or a volcano - you can now get heat-pumps that shift that warm, warm geothermic air straight to the inside of your house (absent offensive gasses)!

No, not really: 'geothermal' is a bit of a misnomer; what the 'geothermal' heat-pump does is move heat from below the ground to the inside of your house.

So, how's this different to the average heat-pump? Well, not by much, really: heat-pumps 'shift' heat from the outside to the inside of the house (or from the inside to the outside), which allows them to be really efficient since they have the effect of generating more energy than what they use up.
This, of course, relies on it not becoming too cold (since the absence of outside heat would make it harder to shift it inside).
The good thing about shifting heat from the ground is that the ground tends to stay a pretty even temperature (15 degrees, according to the link at the end of the paragraph), so the 'geothermal' heat-pump wouldn't be affected by sudden shifts in air temperature. You can find out about it here.

Question: how much will it cost?
Answer: around $42,000 (excluding GST), based on their estimates. However, they reckon that the running cost is about $400 per year, which amounts to an average of $33 per month. So, if the Energywise website is anything to go by, we would spend an average of $58 per month, if we had a power bill of $200 per month.
This would amount to savings of $25 per month; so, if we were going on the amount saved alone, it would take 140 years to pay for itself.

140 years! Better to go on other factors, like what heats the best, and what has a longer lifetime, methinks.

Any words of caution? Yes: this stuff could be seriously damaged in an earthquake; but, then again, what wouldn't? Make sure you talk to your insurers to see what they're offering in regards to that.

Return of the Power Pand blog

Dear All,

Sincerest apologies for the distinct lack of updates, but that'll change from today onward.

Now, for the news:

The latest campaign to find out 'your number' may well be worth checking out. A word of caution though: make sure you take all the factors into consideration!

For instance, would you get cheaper power all year round? Do they factor line charges into the rates? Do they factor GST into the rates?
You see, it may seem as if they give you cheaper rates, but there may be things like line charges and GST that just get added on top; and this may result in a larger overall bill. Buyer beware!

The Connector blog over at Stuff.co.nz gives a bit of information on a couple that built a wind turbine to power their home, and are returning power to the grid. Now it's good to be able to generate your own electricity, but charging the transmission people for it is even better!
So how much do they get paid? Around $300 every month.
But before everyone hails this as the next great step in power savings, have a look at how much they spent: about $31,000!
Ignoring the costs of maintenance, it would take about 8-and-a-half years for it to pay for itself, and this doesn't include any interest they might need to pay back if they took a loan. And imagine trying to get consent for a turbine on top of a 10-metre pole!

But, if they're making good savings, all power to them!

Transpower and outages

The New Zealand Herald had an article with Transpower talking about power outages. 

The first point that the article (and the referenced report) make is that consumers could start ensuring less outages in their electricity. 

What the proposal is that consumers will essentially start putting big electric batteries on their houses so that in short outages this battery could feed (some) of the house.  It's an old idea but new technology is bringing down this cost of this.  Certain things already do this (such as UPS for computers). 

It's often been the size that the electricity battery (and the cost of producing it).  Several years ago to do this you would need a box almost the size of a car motor to run your house for five minutes. 

Hopefully in 10-20 years it will reduce the size of this to a small box able to run the house for 15-30 minutes. 

If you think your power company will install these you're probably dreaming.  In fact Transpower says

"It is often more cost-effective for the customer to bear the cost of very infrequent outages or take other measures to compensate for the grid's temporary unavailability."

The problem (in some ways) is that NZ has a very geographically sparce population.  There is more Km of line per person (particularly in farming communities) than other countries.  This means that there are more lines to maintain and the cost of doing this is large. 

We'll talk about the cost in another post, but it's interesting that the cost of electric batteries is substantially reducing.

Bonds and Genesis Energy

Most Power Companies charge a bond if you are a new customer.  This bond varies in amount, but by way of example Genesis Energy has a bond of $150 for electricity and $200 for electricity and gas. 

The idea of a bond is that if you leave without fully paying your power bill the bond will cover most of it.  Although in reality people who do not pay their power bill frequently don't pay their bond either. 

This expence of a bond is something to consider when moving power companies. (And when moving house).  For example Mercury requires all moving customers to undergo a credit check and if this is unsatisfactory, they charge a bond. 

Also it is worth investigating when a bond can be waived.  For example Gensis Energy will waive the bond if you say you are the home owner.  (Incidently they will never actually check if you are the home owner, they just take your word for it.)  They will also remove the bond if you set up a direct debit to pay the account. 

So do not accept the bond being added, ask your electricity company when it will be removed, and in what circumstances they can waive it.  Hopefully they will provide you with an answer that means you do not have to pay the bond.

Again with Mercury Energy's Fixed price of electricity

We've looked at some implications of Mercury Energy's fixed price offer both here and here. 

We thought we'd do a little bit more investigating for you (the reader) as our posts about Mercury Energy's fixed price offer have been incredibly popular. 

So we nominated our lawyer to call the Mercury contact centre.  He reports as follows:

"I spent eight minutes waiting on the phone to speak with someone.  I didn't think that this was good enough.  I called mid afternoon on a friday because I know that this is when the waiting times are the smallest.  Eight minutes at peak demand is not good enough.
I then spoke with somone who was English second language and she had to transfer me.  I then spoke with a Divina who was very polite and said she couldn't help and would have to get someone to give me a call back.  She said within 30 seconds.  A Tanya gave me call back in 67 seconds.  (Yes I was counting). 

A few things were interesting :
There is a termination fee of $150 if you cancel the contract early.  This fee stays the same irrespective of if you cancel in the first month or the last. 
This $150 fee applies if you switch away from Mercury for any reason, or if you leave the country.  The implication was that if you died it would not be charged.  Very nice of Mercury. 
The offer was only for "special and valued customers" which Tanya agreed was anyone who paid their bills consistantly. 
You can go on the fixed term plan even if you are vulnerable, or medically dependent. 
If you are wanting to switch to Mercury apparantly they will not offer you these prices. 
Tanya said that in the past three years that electricity has risen 18-20%.   So a power company has said that their average price rise is 6-7% a YEAR.  Whilst she would not say it outright, she implied that these price rises would continue. " 

Based on that it's all very interesting information.  Be careful of that breakfee.  Are you wanting to commit to staying in NZ for three years?  It's also really interesting the implication that Mercury are expecting price rises of 18-20% in the next three years.  Look at your $250 power bill, in three years that will be a $300 power bill. 

Hopefully that this has answered some questions about Mercury Energy's fixed price offer. 

Power Bills set to rise by 8pc in March

We may have been a bit optimistic when we said that power prices increase in April and September, because this year the increases will occur in March (although they may only show on your April bill). 

The large electricity companies are all increasing their prices, and the NZ Herald has the headline of 8pc

This will keep happening.  Power prices are only going to go up and really the only thing you can do is to keep your electricity usage down.  (We of course recommend our Power Panda products)

High points from the article are that Mercury is increasing prices for 200,000 customers by 3.5%.  These customers are in the Auckland area, and almost certainly in the same area as the Genesis customers we previously mentioned.  (Meaning it's a lines company rise).  This price rise will occur on 1 April. 

It's the 246,000 Contact Energy customers who will see the large rise.  6-8% dependent on your area.  These price rises occur in every area except Hamilton and Dunedien.  Obviously Contact feels it can simply charge more.  These rises occur in March. 

The herald quotes a Mercury customer as saying (like most people) its a "swindle".  I wonder what the Contact customer's think. 

We at the Power Panda are not suprised, and we expect further rises as the year goes on (particularly in September). 

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.