Tuesday, November 22, 2005

You know it's winter in NZ when....

...the electricity supply crisis pops up again.
Ye gods, if i hadn't spent a couple of years in the industry, this article would be gibberish, as it is, it's a hodgepodge of all sorts of conflicting interests all rolled into one giant narrative. Methinks the reporter had a less-than-comprehensive understanding of the NZ electricity market.
The market isn't that complicated, it's the agendas of the different players that give it the illusion of complexity.
For instance, if Comalco gets (some porportion of) its electricity for 3 c/kWh (who knows what it actually costs them, its a confidential deal with them and the gummint, but i can assure you it's a darn site less than a normal home owner) why do they complain that they have to turn off production when prices go too high? They got enough of it cheaper than the rest of us. Crocodile tears...
Residential customers pay 3x the market price for their electricity, they do this so that they don't have to worry about the variation in price, they're buying retail, not wholesale. Why the hell should they turn off their lights if electricity supply is short? They've paid (through the nose) for the right to not have to give a flying £$Q" what the price of electricity is, that's your problem Mr Electricity Worker, you accepted the deal when you started taking my cash.
Comalco has plenty of analysts and engineers forecasting prices and rainfall, they are in the best position to know what they should do, if they start whining (and this goes for all the rest of the 'producers') they are basically asking everyone that paid 3x as much for their electricity to give it to them.
At the end of the day, if you can't handle the market and make a profit - DON'T USE THE FREAKING ENERGY, LET SOMEONE ELSE USE IT THAT CAN!!
If only there was some way of communicating to everyone what resources are scarce and valuable and what ones are cheap.... Oh wait, hang on, it's called a PRICE SIGNAL, surely at least one of your BCom analysts is smart enough to look it up in their introductory economics textbook...


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