First, let me say that back in the day, we had the second most efficient electricity system in the world. Power was cheap and abundant. We got away with being one of the least energy efficient economies in the OECD because of this wealth. Not long after the market reforms, prices rose sharply and Jeanette explained what was happening. Her words are just as valid today as they were in May 1996, when she wrote:

“That act corporatised power companies, required them to make a profit, forced them to compete … and required them to charge separately for the use of their lines”, Fitzsimons said.

“The government has deliberately unleashed a pack of wild dogs into a fenced paddock. No-one should be surprised that they are now eating the lambs.

“The issue is not whether prices have gone up or down overall, but who is paying more, for what and to whom. Domestic users are paying too much because they are the only captive market, and companies are forced to use them to subsidise competitive business consumers.”

The sad drama is still playing out, despite the efforts of successive National and Labour governments tweaking around the edges of the market, both hounded by a fear of the free market ideologues. (For the record, if we had a truly free electricity market, it might work better than the horrible hybrid we have today. But I do not believe that with its size and isolation that NZ could ever have a proper free electricity market.) A BNZ economist wrote last year:

Figures showing the cost of domestic electricity has gone up five percent faster than inflation come as no surprise to a leading economist.

The Government’s Energy Data File shows residential users have had to fork out for an average 4.8% price increase, every year since 2000.’

That’s well ahead of the 1.4% increase for commercial users each year, and 2.8% for industrial users.

The reasons for the continued price rises were the same ones that Jeanette outlined above. So has anything really changed since the reforms, except that we are paying more?

I contend that there is one more significant change. Reliability. It’s gone to the dogs. Ever since we “deliberately unleashed a pack of wild dogs into a fenced paddock”, as Jeanette said, the corporate hierarchies that replaced the ECNZ bureaucracy have been eating up the lambs of our infrastructure investment.

Instead of one government department, staffed mainly with engineers with a mandate to provide safe and secure electricity to all, (paid at public service salaries), we now have five boards, CEO’s and corporate bureaucrats, mostly overpaid business people with a mandate to wring as much cash as they can out of our public assets, customers be damned.  At the risk of high-jacking my own thread, is this any way to run a railroad?

Ever since the so called reforms we have had virtually no investment in our infrastructure; neither transmission nor generation. The overpaid corporocrats were too busy stripping the gold plate off of all our existing assets, admittedly giving most of it back to the taxpayer in the form of dividends, but much of it lining the pockets of the bloated management structure of the electricity market.

The stripping out of our public assets has had a devastating affect on the reliability of our electricity system, as evidenced by the failures we have experienced continually since the reforms took place. The Herald’s article on Auckland’s current power crisis catalogues just a few of the problems we’ve had over time. There have been many more.

Isn’t it time we admit that the market reforms of the 1990s were not reforms at all but were a complete, unadulterated cock-up? I would need to see a proper case made before I call for the reconstitution of ECNZ, but I will say that further tinkering just won’t do.

Some good honest engineering, not ideologically driven reform, is definitely in order.

It’s time to put the gold plate back into our electricity system.

The Greens secret policy on showers will require armed, masked police officers to enter each person’s bathroom, one by one, and forcibly remove their showerhead.  In its place will be a piddly little dribble of warm water, somewhat reminiscent of standing under a pissing toddler.  That’s our official policy.  Of course, the way we have worded it, and indeed implemented it, is more deceptive:

Instead of mentioning the invading storm troopers and their liquored up ready-to-pee toddlers, the policy claims only to apply to as yet un-built homes or renovated homes.  And it notes installing modern new low flow showerheads is only one way of many to meet an energy efficiency standard while still having powerful warm showers.  And of course it will save households an average of $300 per year in electricity bills. In other words no one is being forced to do anything or deprived of anything.

Nanny state I say! It’s forcing (well, really more like ‘encouraging’ than ‘forcing’) people to save water and money while still assuring they will have hot showers and good water flow.  Next thing they’ll want to take away my right to breathe polluted air and swim in contaminated rivers.

With the likely destruction of the Electricity Commission and the gutting of the RMA, anyone will be able to build pretty much anything they want, anywhere, as long as it uses natural gas which we haven’t found yet, but which National will subsidise searching for. Jeanette summed it up as a “drill and hope” policy. I have quoted much of her release in my last post.

This means completely cutting all the Energy Efficiency programmes that the Electricity Commission (EC) manages and pays for, which are targeted at big business. Now, some may say that I am not a fan of big business. However, the assistance they get from the EC is paid for by themselves through a levy. That means businesses, which are inherently inefficient, will not get the help they need to find all the energy efficiency savings that are staring them in the face.

A typical audit for these businesses finds cost-effective savings of nearly 30%. After they capture that, follow up audits usually find a further 20% in cost-effective savings. Why would you kill a money spinning scheme like this, which raises productivity and profits? Just for ideological spite. The result is that we will need more generation to supply all that wasted energy. We will all pay for that and our security of supply will be worse off than now.

Next come the household consumers. The EC makes sure that we have enough generation and enough transmission to keep the economy going without breaking the budget. It was created because the National Party’s so called electricity reforms of the ’90s actually gave generators an incentive to build less and charge more. Thus, our higher prices are, as National claims, in part the result of capacity constraints. However, National’s policies are to blame, not the EC.

The EC was created to fix that problem and it is working. Now National wants to ditch the EC. Without the EC, we would have had blackouts this winter. They are the ones that made sure we had enough generation to cope. And it worked!

Then there is their false promise of a renewable future, all the while making firm financial commitments to a gas-fired future. Very disingenuous.

Oh, well. Same old failed policies of the past. No surprise there. The wolves will be circling around the carcasses after another round of National Party ‘reforms’. Do voters really have such short memories?

Opposing plans for new coal-fired power plants in developed countries has become an international frontline of climate change politics. Jim Hanson, senior climate change scientist at Nasa, wrote to Gordon Brown last year calling for a ban on new coal, stating that Brown’s decision on Kingsnorth has “the potential to influence the future of the planet”. This is because coal is one of the most polluting and carbon-intensive forms of fossil fuels – producing twice the carbon emissions per unit of electricity as gas. Coal is the cause of fully half of the fossil fuel-caused increase of CO2 in the air today, and there is plenty left to burn. If we don’t limit the use of coal, avoiding catastrophic climate change will become impossible.

However, Paul Golby of E.ON, in these pages yesterday, dismissed anyone opposed to his company’s plans to annually emit at least 6m tonnes of CO2 into the atmosphere – more than the total emissions of Costa Rica or Cameroon – as naively ignorant of power generation realities. He has tried to scare the public into thinking that new coal is necessary to keep the lights on.

Yet the independent energy consultancy Pöyry, in a report out today (ilexenergy.com), gives the hard numbers showing projected demand can be met, while respecting strict emissions limits and energy security concerns, using renewables and not resorting to new coal. Meanwhile Cambridge professor of physics David MacKay’s book Without Hot Air presents five different plans of how we can meet the UK’s energy needs and radically reduce emissions. Of course there are no easy answers, but for Golby to deny that there are no answers other than business as usual is dangerously untrue.

When are we going to accept what the scientists, including the Royal Society, are telling us, and commit to a renewable energy future? We don’t have to shut all our fossil fuelled plants immediately. In fact, here in NZ, it has been calculated that the cheapest and easiest way to go is to commit to 90% renewables by 2025. It’s easily done and assures our children don’t have to pull their world apart in a vain attempt to stop the ravages of climate change. By then it will be too late. ‘Business as usual’ needs to be relegated to the dustbin of history.

The Electricity Commission sought to secure some reserve generation for dry years, (which the market wasn’t providing), so they commissioned the Whirinaki plant, against the howls of market distortion coming from the National Party’s bench. They also sought to stockpile coal at Huntly, (not encouraged/allowed under the “market”), as a stop-gap measure should there be a failure of plant elsewhere or a dry year.

Finally, and again against howls of protest from the National benches, the government back-stopped the gas contracts that allowed E3P to go ahead. It would not have happened under the pseudo-market that National created.

E3P represents 385MW of plant that simply would not exist under a National government. Whirinaki represents 155MW that would not exist under a National government. The stockpile of coal outside Huntly would not exist under a National government. Did we need this capacity to cope with just the first bit of this dry year? You bet!

It is at the very least disingenuous and at the worst hypocritical that the National Party has grandstanded throughout the dry summer, scaremongering and exaggerating all along, when they would have done absolutely nothing to prepare for what we are going through.

The Winter Group has started its modest conservation campaign, even as the rains needed to avoid it are falling. We may not be out of the woods yet, but there is one thing we can be absolutely sure of – under National, the lights would already be out!

The beer fridge is under threat from energy experts extolling ways people can conserve dwindling power reserves to avoid blackouts.

The poor old beer fridge. I’m all in favour of power saving, power crisis or not.  It’s one of those many sensible pragmatic solutions to climate change that doesn’t hurt anyone. Luckily putting your beer fridge into hibernation might benefit the equally threatened long finned eels of the Mokihinui.

I have rarely blogged before, so it will be interesting to see how it helps me organise my thoughts.

There are so many important issues that it is difficult to know where to start. So I will blog about them in no particular order and see where the conversation leads. There are issues with allocation, with equity and with the basic trading unit called an NZU or New Zealand Unit. There are missing Kyoto emissions and there is also the complementary measure of a ten year moratorium on new thermal baseload generation. May as well start there, actually.

Frog blogged here that the National Business Review reported that the Nats had done a deal with Labour to scrap the moratorium in exchange for continued support for the Bill. While I was issuing a press release here, the Nats were vehemently denying any deal and calling for a retraction. All that drama aside, one would have to ask if the moratorium actually mattered at all as it is written.

I asked three submitters during the Select Committee hearings whether there was any kind of thermal power station at all that could not be built under the exhaustive list of exemptions within the Bill. None of the three could name a single instance of something that would actually be banned. Contact Energy even argued that was not the point – it was having to get the Minister’s permission under the exemption clauses that was onerous and time wasting!

Many are arguing that with a price on carbon, the market will take care of it (heard that one before?) and build renewables. Certainly Contact has told us geothermal is currently cheaper than building new gas fired generation, which is why they have switched their emphasis and plan to build a great deal of geothermal baseload generation.

But not Genesis. Re-packaging their proposed Rodney gas fired station (which would be the biggest in the country by a large margin) as a peaking station by changing just a few words in their resource application is incredibly cynical, but no-one, including their shareholders, is pulling them up on this.

They’ve figured out that if they build it as a peaking plant (not allowed to run more than say, 30% of the time) then whenever supply gets a little tight they can apply under the “emergency� clause to run it all the time for “security of supply�. Knowing there are 480 MW of gas station just sitting there waiting for an opportunity will discourage others from building renewables, so supply is guaranteed to get a little tight. However, if that doesn’t work there are other exemptions it can try.

Fact is, if we want to reach the 90% renewables target by 2025 we have to stop building thermal plant and start retiring it. But that won’t happen under this legislation. It’s that simple.

“Action is already being taken by the industry to conserve water and this has seen a number of noticeable changes on the power system – high running of thermal plant in the North Island, greater southbound flow across the HVDC link and measures undertaken to relieve the constraints that this has been placing on the transmission system.”

“Current high spot prices will also encourage large industry customers to conserve electricity.”

“The industry does ask at this stage, that consumers be prudent with their energy use and to switch off any appliances at the wall, lights and heating/air conditioning that are not being used. We are not asking for consumers to go without electricity that they need – just to be mindful going forward of conserving electricity that is not being used.”

Many frogblog readers would think that I would be all over this like a rash. Not so. Prudent management is needed when you have such a high level of renewables in the system, and so far the market mechanisms are coping just fine. It appears that Transpower has been appointed to front what used to be called the winter group. The full press release shows that they are well prepared for further measures should the usual May rain not eventuate.

It’s all about risk management. I’m sure the urge to downplay the situation is rife amongst the politicians. Even Gerry Brownlee can’t demand both a free market and heavy handed government intervention at the same time, despite his lame efforts so far. Right now the engineers are saying not to panic and to do what little you can to save some power, without depriving yourself of the essentials. With the Taranaki Combined Cycle (360MW) plant now fully operational once again and the Pole 1 of Cook Straight back in northward service for winter peak events, we should be alright – providing we get just a bit more rain. (Down south, please, Wellington has had enough this week. )

A war of words has erupted between the Major Energy Users Group, or MEUG, and the Federation of Family Budgeting Services. MEUG’s press release Friday called on the government to lead the way in electricity conservation in order to stabilise spot prices and keep the lakes from running dry. However, the opening comment in the release:

While it’s not time to panic, everybody needs to start making simple low cost electricity conservation savings to help the worsening South Island lake storage situation and to take pressure off spot prices

has been taken by the Federation to mean that even the poor need to start conserving in order to make sure that big companies can get cheap power. I assume MEUG has made other comments in the press too. In her statements to Radio New Zealand,

Federation of Family Budgeting Services head Raewyn Fox says it is insulting to tell families who are already keeping power use to an absolute minimum to cut back. - and - calls for householders to save power will just add more stress to families already struggling with higher food and fuel prices.

It is indeed getting late in the month with the significant watching brief – April, and the South Island lakes at least are still very low. Having bashed Gerry Brownlee for scaremongering all summer, it is indeed now time to look hard at these things. But is it time to panic? I still don’t think so. The Winter Task Force still doesn’t think so.

Is it time to call for conservation? It would be un-Green of me to say that any time is not a time for conservation. But should we be asking those who have the least, to sacrifice the most, as winter sets in? I don’t think so. Those who will hear MEUG’s call are those who should keep the lights and the heaters burning. They would be the poor, those with children and those seniors and others whose health would be put at risk. Should we fill our emergency rooms with more asthma attacks, pneumonia and flu in order to keep big industry flush with cheap energy? That’s robbing Peter to pay Paul. A false economy.

By all means, everyone should look at where they can save and conserve energy, but not at the expense of their health and well being. We can do with a few less ingots of aluminium this winter, so we can spend another Christmas with Nana next summer.

In summary, I think both sides of this story are possibly guilty of hyperbole. However, given a choice of people or a few units of production, there is no question where my loyalty lies. If the MEUG folks think some conservation now will pay big dividends later, they should commence some load shedding forthwith. They have the means to make the biggest impact in the shortest time and they should act on their concerns. Just don’t ask Nana!

Researchers at Oak Ridge National Laboratory concluded that supporting a 25% market share of light-duty (cars and SUVs) plug-in hybrid electric cars and trucks in 2030 could require either up to 162 new power generation plants (if recharged during the day) or no new power plants at all, if recharged after 10 p.m.

In aggregate, the model predicts an increase in demand, generation, electricity prices, and emissions from the utilities created by the introduction of PHEVs. It also suggests that by 2030 almost all regions (10 out of 13) will need to add capacity to provide for charging PHEVs, mostly in the scenario where PHEVs are charged at 6 kW in the evenings. In all likelihood, to avoid these problems the utilities in the regions would expand their capacity, increase their imports, or establish demand response programs beyond the level that NEMS had calculated, but these factors were not modelled in the scenarios.

Some assessments of the impact of electric vehicles assume owners will charge them only at night, said Stan Hadley of ORNL’s Cooling, Heating and Power Technologies Program.
That assumption doesn’t necessarily take into account human nature. Consumers’ inclination will be to plug in when convenient, rather than when utilities would prefer. Utilities will need to create incentives to encourage people to wait. There are also technologies such as smart chargers that know the price of power, the demands on the system and the time when the car will be needed next to optimize charging for both the owner and the utility that can help too. (Peak Oil News, March 14 2008)

Will New Zealanders be any different than Americans when it comes to plugging in at convenient times? I doubt it. We are going to need some serious demand side incentives to keep people from plugging in at will. Does our government have the courage to dictate to the market or will simple price mechanisms be enough? I don’t have an answer or a strong view either way. I just think that we should be discussing this now rather than waiting for the cars to roll off the ship from Japan.

Now he is quoting Meridian’s CEO Turner, out of context, telling us that the sky is about the fall because the lakes are low. Gerry, the lakes are often low at this time of year. Summers can be dry in NZ. Get outside more! In his press release, he completely contradicts Transpower CEO Dr Patrick Strange, who just Wednesday morning told the Sunrise programme that no judgements can be made at all about lake levels until at least April. Strange goes on to say that Wednesday’s meetings were not drought or lake level related, just the normal winter planning meeting the industry always has.

Well Gerry, the sky will fall soon, likely in the form of autumn rain. Come back in April with that Walley from the MEA. Then we’ll see if the lakes are too low, if New Plymouth is still under maintenance, etc.

As the Greens pointed out when the framework document was released, coal seam methane has been left out of the trading scheme. This is the methane that leaks out of coal seams, sometimes perfectly naturally but more often than not only after a mining company rips into the seam of coal. Some may brush this off as a minor point about a minor gas. However, coal seam methane is part of NZ’s Kyoto inventory, and the government will have to stump up the cash for this discharge regardless. This could cost us taxpayers in the millions, particularly if the default Kyoto formula for calculating mine emissions is used.

Why is the government so hell bent on subsidising the coal industry? Apparently because there is no historical precedent in the regulations for accounting for coal seam methane unless the mining company uses the gas. However, this could be said about many things in this legislation! There is no regulatory precedent for charging the cement industry for their emissions either, but they will be asked to pay the full cost of their activities. If the methane leak has an anthropogenic cause, like say coal mining, then it should be payed for by the company that caused it, not by the taxpayer.

Until this flaw is fixed, the legislation is not what it is touted to be. Still, the key issues signalled in the framework document are present in the legislation. The Greens still believe the timing for the sectors is a bit slow, the allocation of credits has yet to be decided and not all gases are covered, but it is the beginning of a price on carbon, which is a key Green policy. Click here for the Green’s Background Paper and the Green’s response to the ETS.

On a positive note, the government has chosen to hard code the ten year moratorium on building new thermal base-load electricity generation into law, making a level playing field for both public and private generators. This would mean that no one could build a fossil fuel fired electricity plant bigger than 10 MegaWatts without it being necessary for security of supply, peak power or some other proscribed purpose. The definitions are clear and the reasons and methodology for granting exemptions to ensure security of supply are spelled out. It’s so well spelled out that this frog has to ask, why not make the moratorium permanent? Climate change isn’t going away in ten years time, so why should the moratorium? Should the day come when we truly need another thermal station, all the Electricity Commission has to do is ask.