Power games

Sometimes the Waitaki River runs higher than normal even though there hasn’t been rain or snow melting in its catchment.

The locals reckon it’s because Meridian Energy is letting water out of its hydro dams to generate (ouch) a shortage so it can put up the price of power.

The company denies that.

Whether or not it’s true, the way the system works means that power companies can benefit from shortages because the spot price for electricity rises.

The Electricity Review  , released yesterday by Energy Minister Gerry Brownlee, suggests compensating consumers if they face conservation plans which will be one way of disincentivising companies from manufacturing shortages.

That’s good in theory, but there are concerns that the elderly who tend to be very thrifty anyway, might not heat their homes properly in order to save power. When it’s cold if you don’t have an alternative to electrical heating, you’re faced with using power or freezing.

Other recommendations in the review are:

* governance improvements with the Electricity Commission replaced with an Electricity Market Authority. 

* line companies allowed back into retailing 

* a reallocation of assets among SOE generator-retailers to increase competition in wholesale and retail markets.

Security of supply and affordability are two factors which concern consumers most.

Some in Central Otago also took environmental concerns into account. The Otago Regional Council’s clean air policy prompted some to convert their home heating from wood burners to heat pumps but they now find they can’t afford the power bills.

While individuals can make savings, one of the biggest wastes of power appears to be in transmission.

I’ve yet to find a definitive answer to the question of how much electricity is lost getting it from where it’s generated to where it’s used, but even if it’s less than 10% (and no-one has suggested it’s that low), the cost of wasting that much all day, every day ought to provide an incentive to generate power as close as possible to the end user.

3 Responses to Power games

  1. Ian says:

    the increasing flow is more likely to be a water release to ensure that when the snow melt arrives the power system isn’t overwhelmed. Meridian loses money when the water is in short suuply as the water provided power is by far the cheapest. Any power that they need to purchase on the spot market to meet their retail commitments is far more expensive than the power that they generate through the hydro system.

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  2. gravedodger says:

    I accept that Nuclear generation is very capital intensive and under our current phobic attitude, politically impossible but if we are going down the present track vis a vis climate change I can see few alternatives. When the cook straight cables were installed it was to move surplus energy north and in fact I seem to remember that north to south was impossible at that time however we now find that because the hydro power is cheaper the system runs down hydro capacity to the point where those in the south who have a higher heating requirement are threatened with shortages when the truth is the situation has been contrived.
    On another point any future SI hydro development should include major emphasis on water management eg Opua, Wairau and Waitaki canal systems and transmission of Westcoast headwaters into east running river systems

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  3. Richard says:

    No Right Turn has a copy of the electrity report
    http://norightturn.blogspot.com/2009/08/inconvenient-truth-about-electricity.html
    HP- apparently the loss of power in transmission is 7.5%
    Worth a look at the appendices. Still think its worth looking at harnessing the Westcoast headwaters as gravedodger says. Altough it would be reasonable to assume that power generators have looked at this option.

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