Just in case the Energy Commission would like to get off their fat asses and do something, Genesis Energy says there is absolutely no relationship between a massive price spike and driving smaller energy operators out of business.
After all, what motivation could the top four possibly have to smashing down any rival, no matter how small?
As noted in the ODT:
Genesis Energy says recent stress in the wholesale electricity market does not mean the major generators have colluded against the rest of the sector.
Small-scale retailers Flick Electric, Pulse Energy, Vocus Group and Electric Kiwi have complained to the Electricity Authority and sought a declaration of an undesirable trading situation, which they say is caused by the way the biggest players in the market are operating in the futures market for electricity.
Their call comes in the wake of the closure of boutique electricity retailer Dunedin company Payless Energy this week.”
Genesis is supposedly a “market leader”, but what that really means is it’s one of a very very tight oligopoly that makes it impossible to calculate whether assets are being used efficiently.
The littlies are alleging a failure of market-making in the futures market and the failure of timely disclosure about fuel supplies have disadvantaged them and shaken their confidence in the market. A combination of low hydro-lake levels and disruptions to natural gas supplies has led to volatile and skyrocketing wholesale electricity prices in recent weeks.
Again from the ODT:
Power prices jumped in late September as South Island lake levels fell and Shell shut production from the offshore part of the Pohokura gas field because of a fault on the production platform.
Those factors, combined with very weak wind production some days and other temporary generation outages, resulted in average wholesale prices exceeding $500 per megawatt hour (MWh) on some days in October — the most in seven years.
While the larger energy companies have said the market is working as it should, smaller companies cannot so easily absorb repeated peak prices.”
If small companies are finding it hard, how does the ordinary citizen feel?
Clearly this government realises there is something wrong with the market when it has to directly subsidise hundreds of thousands of citizens with a “Winter Fuel Allowance”
A case in point is Dunedin’s Payless Energy, which quit trading this week and transferred its 754 customers to another retailer, citing the recent high spot prices cost as unsustainable for its business model.
Note the small ones are doing what they can and making a complaint to the Electricity Authority.
Do we even have an electricity regulator? Can anyone remember the last time they had an effect on anything at all? If they were pushed over a cliff how long would it take for anyone at all in the country to notice they were gone?
We sure don’t have one that can take on the lazy Vector that leaves Auckland vulnerable to increasing storms. That’s because pretty much all it does is check the veracity of the spot price in times of stress, rather than expand its mandate to monopolistic line operators.
In short bloody useless for actual people.
Minister Woods has clearly bought the corporate line of “nothing to see here”, in no small part because her government is still the majority owner. After all why regulate when the government itself reaps half the profits? No one is motivated to protect the citizen, no major generator will lift a finger to enable competition, and line networks aren’t even in the frame of regulation, so we get royally screwed.
So far this government is having a great time pumping public cash into markets and subsidising the poor with cash.
I will have more respect for this government when it shows that it can face down the corporates and regulate them in the interests of the citizen.