by Paul Bannister | Jun 13, 2016 | Energy
As the New Zealand agents for Energy Action we are able extend our vast market knowledge, expertise and business and financial analytics to Trans-Tasman customers.
The following is a guest post written by Dr Paul Bannister from Energy Action regarding the recent Energy Management Association of New Zealand conference that he recently attended along with Total Utilities.
I spent most of last week in NZ attending the Energy Management Association of New Zealand conference, and was once more reminded of how well the Kiwis do some things.
For starters, there was the conference itself. Two days of excellent speakers – enough to keep my attention for probably 75% of the time, which is well above average for a conference. Over 100 in attendance including practitioners, clients, suppliers, etc. Easily a match for many of its peers in Australia, in my humble opinion.
Then there was the EECA Awards night. This is energy-efficiency-in-New-Zealand’s “night of nights”, with 11 industry sponsored awards covering all aspects of energy efficiency, showcasing many excellent projects. As an event, this is way beyond anything we have in Oz, with a comedic MC (and indeed a fairly comedic Chairman of the Energy Efficiency and Conservation Authority), big production values, etc etc. Minor grumbles about food aside (they starved us until 8:30pm and then served us canapes…), it was an excellent evening and an insight into many project types you don’t see in Australia, particularly in the industrial and institutional sectors. Most obviously, the Kiwis are well ahead of us when it comes to biofuels, prompted particularly by the lack of reticulated gas in the South Island. In general I’m of the opinion that NZ has a greater focus on industrial energy efficiency than I’ve seen in Australia; while their commercial sector work has some catching up to do.
Of course there is also a paradigm difference in NZ: their electricity is already mainly hydro so they have the march on Australia in terms of greenhouse intensity, even allowing for the sheep. So whereas we seem to think of gas as being clean, for them it’s actually more emissions intensive than electricity.
And then there was the forceful reminders of how much smarter their electricity market seems to be than ours. Before I rant on, just consider this: the purpose of a market is to enable buyers and sellers to meet and determine a natural price. So if you have too much generation relative to demand, electricity is cheap, while if there’s too much demand and not enough generation electricity becomes expensive. The ultimate reflection of this dynamic is the spot market, which is the price that electricity sells at on a 15 minute basis. Of course, normally we don’t see this because electricity retailers on-sell electricity to us at essentially fixed prices; if the spot market goes crazy, they take the hit on our behalf. But that makes no sense because as users of electricity we can respond to a spot price signal, so we need to have the ability to access that signal. In NZ, it is normal practice for large energy users to have some direct spot market exposure and indeed it is possible to buy electricity at a spot market linked price at a residential level. This sort of transparency is missing in Australia, and indeed we are a long way off from getting near to it. But in a generation market with increasing exposure to the variability of renewable generation, it’s increasingly important that we catch up with the Kiwis and join the 21st century.
Overall, I’m inclined to make an observation: Kiwi ingenuity has been driven by the necessities of working in a country with a hydro-dependent electricity system that goes into crisis around once a decade; that doesn’t have the population or gas reserves to support gas infrastructure across the South Island; and that has comparatively limited coal reserves. Economically, when the world catches the sniffles, NZ tends to catch double pneumonia because it the economy lacks the inertia provided by a large mining sector. Necessity is the mother invention and the Kiwis have responded by being smart and adaptable.
It’s hard not to contrast this to the situation in Australia where we have rich fossil fuel reserves, an electricity network that is stable to the point of stagnation and of course a mining industry that has been propping up our lifestyle for a half a century. So whereas the Kiwis have had to be nimble, it’s hard not to look at Australia and think we are just a little too secure and comfortable for our own good. Now I’m not knocking that security but at times I think we need to ask ourselves whether we have become complacent. Australia has many great minds, many great innovators and many great opportunities but a bit of a track record of forcing them overseas because the local policy and economic environment isn’t as supportive as that of our trading partners. We need to learn from the Kiwis and embrace a little bit of the frisson of excitement that change and instability can give so that we can be leaders of positive change rather than the ballast of resistance and intransigence.
by guest_hans | Mar 29, 2016 | Energy
A Brief History of the Emissions Trading Scheme (ETS) in New Zealand
In 2008, the New Zealand Government introduced an emissions trading scheme (ETS) for greenhouse gases. It required upstream energy suppliers, the users of imported fossil fuels, and industries with CO2 process emissions, to surrender a New Zealand Emissions Unit, for every tonne of greenhouse gas (GHG) that would be subsequently be emitted. Upstream suppliers pass on the costs of these emission units to downstream users.
The Government was aware that energy-intensive, trade-exposed industries would suffer competitively if they were fully exposed to this cost. It therefore provided a free allocation of up to 90% of the emission units required to these industries. It provided a price cap of $25 for an emissions unit.
Geothermal power Station, near Taupo New Zealand
In 2009, the incoming Government made some amendments to the ETS, in recognition of the effects of the global financial crisis. It reduced the requirement to surrender emission units to one unit for every two tonnes of GHG emitted. It delayed indefinitely the planned phase-out of the free allocation of units to energy-intensive, trade-exposed industries.
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by chris | Mar 10, 2016 | Energy
In the past two years we have seen an unprecedented number of customer switches between retailers taking place within the electricity market specifically the small commercial market.
As the market has become more fluid over the last 2-3 years with the introduction of ASX Energy Futures, it has opened the door to more retailer options or “second tier” retailers where generation is not required for companies to on sell energy to customers. Some of these companies have a very small amount of generation underpinning their retail business however they can grow market share through ASX purchases. The increase of retail participants such as Flick Energy, MegaTel, Prime Energy, Pulse Energy, Switch Utilities and Utilise but to name a few, overall market competitiveness has seen switching trends rising annually between 2009 and 2015. With an expanding retail market it is important for customers to know that all retailers must comply with the Electricity and Gas Complaints Authority (EGCC) and that consumers have a number of guaranteed rights when dealing with their utility suppliers.
The below graphic shows total monthly switches that have taken place from 2004 to 2015. We can see from 2009 switching trends rising to double the number of monthly switches seen in the previous 5 years from 2009.
As a result customers are reporting that they are increasingly confident in a competitive energy market place as outlined in the below graphic.
With the advent of new energy retailer companies and various product offerings it is important that customers understand their rights if a dispute arises.
Picking the winners
There have been clear winners amongst the various retailers in the switching war we have seen over the past two-three years, who have capitalised on customers desire to seek out the “best offer” available in the market, while other retailers have struggled to keep up the pace in the increasing competitiveness of the market.
While past trends have showed retailers using high credits to entice customer to switch to them, the new “trend” we can observe in the market place is to offer high prompt payment discounts, with highly competitive rates, provided the customer locks in for a two/three year term with fixed pricing on the retailer (contestable) portion of the rates.
Small commercial customers have typically preferred to go for uncontracted offers in the past however more and more customers are seeing the benefits of securing good deals in a competitive market by locking into fixed pricing for a 24 or 36 month term.
With this in mind once a retailer has been able to win a customer, they must be able to provide a high quality level of service, while still offering the best deal possible. Ultimately the greatest test of a retailer’s service is how they deal with difficult situations and complaints that can arise within the customer-retailer relationship.
Resolving Disputes: Your Rights with the EGCC
Aside from getting a better deal, the other main reason customers will switch from their incumbent supplier is due to dissatisfaction with the current service they are receiving. Service offered between retailers will differ given different billing systems, procedures and organisational culture unique to each retailer.
When it comes to the handling of complaints or disputes there is a set process that all retailers and lines companies must follow as they are all members of the Electricity and Gas Complaints Commission (EGCC). It is important to highlight that most retailer standard terms and conditions require that any line item charge that is not in dispute is required to be paid by the due date of any invoice.
One of the most frustrating parts of having a complaint for customers is the time it can take for this to be resolved, sometimes weeks or even months. It is important to be aware of the fact that retailers have set time standards in which disputes should be resolved, outlined below:
- Retailer is to acknowledge your complain in writing within 2 working days (excluding delivery time.
- Retailer will respond to you within 7 working days to inform you of the steps they will take to reach a resolution.
- Retailer will attempt to resolve your complaint within 20 working days. In cases where it may take up to 40 working days to resolve they must explain in writing why it will require more time to resolve.
Under the EGCC scheme a complaint is considered to have reached “deadlock” if:
- It has taken longer than 20 working days to resolve the complaint and the customer was not notified in writing that they have good reason to extend the time for resolving the complaint; or
- It has taken longer than 40 working days to resolve the complaint; or
The EGCC is satisfied that:
- The retailer has made it clear they intend to do nothing about the complaint
- You (as the complainant) would suffer unreasonable harm from waiting longer, or
- It would be otherwise unjust to wait any longer.
If you are dealing with a complaint and you believe it has reached “deadlock” stage it is important to raise this with the EGCC within 2 months from when you consider it to have reached “deadlock” stage.
What can the EGCC look into?
The EGCC can look into almost any complaint about an electricity or gas company, with common complaints being around bills, meters, disconnections, and damage to property. The EGCC can also be used for complaints about the actions of staff or contractors while on land, as well as access to and use of land on which there is electricity or gas equipment.
The EGCC can also check if a company has provided accurate information about its tariffs and applied them correctly, but cannot look at complaints about the level of pricing for electricity or gas.
Once the EGCC has been approached about a deadlocked complaint they will act as a conciliator between you and the company with the aim of reaching an agreement on a fair and reasonable outcome for the dispute. As part of this process it could include:
- Taking part in a teleconference with the retailer and an EGCC conciliator
- The EGCC seeking expert advice about technical or legal issues
- Investigating the facts of the complaint – the EGCC will seek information about what happened from you and the retailer
Once their investigation is complete the EGCC will provide a summary of facts and its recommended resolution to the complaint to both the customer and the retailer.
Resolution and Settlement in the EGCC Process
If you as the customer accept the recommended resolution as full and final settlement but the retailer does not, the Commissioner can make the decision binding on the retailer. If you do not accept the recommended resolution then the complaint is considered closed and you will need to take the complaint to another forum such as the District Court or, if the company is a state owned enterprise, the Office of the Ombudsman.
While it is hugely advantageous for customers having the EGCC as an available forum for resolving disputes it is important to be aware of the fact that this process can take several months to reach completion which can be costly in terms of time spent in discussion with all parties involved and can be very frustrating at times dealing with the constant back and forth between each party. Particularly for large corporate businesses the cost of time spent can be several thousands of dollars in lost time of staff dealing with the process.
Who can help?
With these facts in mind it is highly advantageous to have industry experts like Total Utilities advocating on your behalf to navigate through this process which will save you both time and money having to deal with the process for you.
Typically complaints start of as small issues which go unnoticed which grow into big problems. Businesses can circumvent these issues by being signed up as a managed service client with Total Utilities as we will monitor your monthly invoices, cost and usage and reporting this to you in highly useful report summaries each month. As part of this process we proactively identify potential issues and resolve these immediately with the retailer ensuring minimal disruption to your utility accounts.
If you would like more information on having your utility accounts managed by Total Utilities please call us on +64 9 576 2107 or email at [email protected] to speak to an industry expert.
1 Source: Electricity Authority
2 Source: Energynews, 2014 – http://www.energynews.co.nz/news-story/17105/consumers-show-increased-confidence-retailer-competitiveness
3 Source: EGCC Annual Report 2014-2015 – http://www.egcomplaints.co.nz/media/248011/egcc.ar.15.final.pdf
by chris | Aug 25, 2015 | Energy
The New Zealand energy market is shifting sands once more with recent announcements concerning the future of energy generation.
Following the new deal for the Tiwai Point aluminium smelter with Meridian, Contact and Genesis, a series of announcements have been made regarding our thermal baseload generation.
Contact has been quite vocal about the recent announcements with chief executive Dennis Barnes saying “The role of thermal plant in New Zealand’s electricity future is to support renewable generation and the growth of new technologies. This is best met by fast-start, gas-fired peaking power stations rather than large base-load plants.”
Genesis announced the intended 2018 closure of the remaining coal turbines at Huntly. More recently Contact has announced that Otahuhu B will be closed next month. Last week’s set of announcements were concluded by Genesis announcing the cancellation of their Solid Energy contract for the supply of coal, coming on the back of Solid Energy being placed into administration.
The big change was the decision to close and or reduce thermal generation stemmed from the energy market as opposed to government legislative intervention. (more…)
by chris | Jan 15, 2015 | Energy
Geothermal generation supplied nearly 20% of New Zealand’s total electricity last week – a substantial rise from the average 7% contribution from this energy source. The spike in demand was due to lower than average output from thermal and hydro generation, caused by power station outages in December and low inflow levels in the country’s hydro lakes.
Thermal-based generation outages kept pricing elevated throughout December and Contact’s Otahuhu B plant in Auckland remains out due to on-going maintenance. National water storage in hydro lakes has continued to fall around 7% below average for this time of year. Latest NIWA forecasts predict less than a 50% chance of rainfall hitting normal levels in the South Island between January and March. This could be compounded by above-normal temperatures in the west of the South Island over the same period with a 35-40% chance of average temperatures in all other Southern regions.
The country’s biggest hydro generator, Meridian, is reported as being “comfortable with the current situation.” Meridian’s operating report for December shows its inflows last month were 81 per cent of average. (more…)
