Wednesday 1 August 2012

Residential supply customers carrying the can for gold-plated electricity industry infrastructure upgrades


Granny Herald
points out the blindingly obvious on 27th July 2012:

"If any further evidence were needed to demonstrate how the power companies, both state-owned and private, have been foisting unnecessary price hikes on their customers, it can be found in the industry's own energy forecasts.
Forecasts of demand for electricity have a significant impact on the price of electricity. The higher the forecasts, the more money earmarked by industry for network upgrades in order to cater for this supposed increase in demand. In turn, the higher the financial returns for the industry players.
Ironically, as the transmission and distribution companies earn a regulated return on their assets, they have a perverse incentive to spend for the sake of spending.
Yet the great conundrum of the radical rise in Australian electricity prices
- up 70 per cent in six years and poised to ratchet another 30 per cent higher this year and the next - is that consumer demand has actually been falling, and falling for years.
Actual consumption in the National Electricity Network has been way out of whack with forecasts. For the past three years, the industry has had to downgrade its forecasts, and by a considerable margin. Still, they persist with forecasting large rises in energy consumption, even in the face of a clear downtrend in actual demand - and huge price rises at the retail level to boot.
Not only has the electricity industry failed to recognise a change of trend in total demand, but in peak summer demand and peak winter demand too."

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