Time to give electricity the flick?

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#1822360 14-Jul-2017 11:25

timmmay:

tdgeek:

Every provider is paying spot prices, except Flick. Unless you put every consumer on spot prices, nothing will change. Consumers aren't abusing power usage as that affects their bill, and where winter hurts providers paying spot but billing fixed rate, the opposite happens when spot is very low. Its swings and roundabouts for providers, and the vast number of consumers are not affected. Winter is winter.It also needs to be treated by spot paying consumers on Flick to be swings and roundabouts.

Are you sure about that? I assume that the larger companies may have agreements to buy at some specific price, and some own their own generation.

Yeah possibly. Aredwood also mentioned that maybe they buy forward cover. But ultimately someone is always wearing the spot prices, either directly, or indirectly if they pay more to forward cover themselves. I'm not sure if many power companies, i.e. RSP's have their own generation

Lostja

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#1822362 14-Jul-2017 11:26

Supply and demand still need to be matched for every half hour trading period. Generators offer in at which price they are willing to dispatch electricity.

dantheperson

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#1822364 14-Jul-2017 11:30

pogo:

What disturbs me is how bad the spot price is when we're only in the 'watch' zone. Is there historical spot price data for previous emergency or alert situations? How do we compare now?

Historical spot prices https://www.interest.co.nz/charts/commodities/wholesale-electricity

Looks like current pricing is a little lower than 2012, and allot lower than 2008.

tdgeek

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#1822365 14-Jul-2017 11:31

Side topic, what drives the spot price?

is it:

1. The direct effect of much higher fossil fuel generation costs, bumping up the average kWh price, as the FF mix is higher?

2. Reduced Hydro generation kWh's, so price is increased to retain the same revenue on a smaller level of hydro generation?

3. Both?

pogo

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#1822368 14-Jul-2017 11:36

Perhaps Flick's model could incorporate some kind of spot price insurance in the form of a cap: the consumer pays a up-front premium so that their spot price never goes above 40c (for example). So they would buy at spot but have a fixed upper rate of 40c. Flick could manage this by trading options. This would encourage loyalty as well, because if I pay for a 40c cap for next winter I'm not likely to leave before then... and why would I if my price is capped at a manageable level?

tdgeek

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#1822373 14-Jul-2017 11:43

dantheperson:

pogo:

What disturbs me is how bad the spot price is when we're only in the 'watch' zone. Is there historical spot price data for previous emergency or alert situations? How do we compare now?

Historical spot prices https://www.interest.co.nz/charts/commodities/wholesale-electricity

Looks like current pricing is a little lower than 2012, and allot lower than 2008.

So in fact no issue. In the past these highs and lows get absorbed, consumers are blissfully unaware. Flick is here now, they give the benefit of low standard spot prices, and now these consumers need to weather the high spot prices also. This is largely why, I assume, that other power RSP's have seemingly high fixed prices, as these include the buffer for these highs and lows

EK has lower fixed prices than standard RSP's, but also they are online only so that probably covers why. But they aren't 10c as I believe Flick can be in normal times. I saw that number quoted here

dantheperson

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#1822374 14-Jul-2017 11:43

tdgeek:

Side topic, what drives the spot price?

is it:

1. The direct effect of much higher fossil fuel generation costs, bumping up the average kWh price, as the FF mix is higher?

2. Reduced Hydro generation kWh's, so price is increased to retain the same revenue on a smaller level of hydro generation?

3. Both?

4. Profiteering of the generator oligarchy.

dantheperson

174 posts

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#1822381 14-Jul-2017 11:46

dantheperson:

tdgeek:

Side topic, what drives the spot price?

is it:

1. The direct effect of much higher fossil fuel generation costs, bumping up the average kWh price, as the FF mix is higher?

2. Reduced Hydro generation kWh's, so price is increased to retain the same revenue on a smaller level of hydro generation?

3. Both?

4. Profiteering of the generator oligarchy.

It's certainly not 1). I don't know the marginal cost of thermal generation, but given they generate at far far lower spot prices, you can assume their generation costs are below that, as they wouldn't run at a loss.

tdgeek

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#1822383 14-Jul-2017 11:47

pogo: Perhaps Flick's model could incorporate some kind of spot price insurance in the form of a cap: the consumer pays a up-front premium so that their spot price never goes above 40c (for example). So they would buy at spot but have a fixed upper rate of 40c. Flick could manage this by trading options. This would encourage loyalty as well, because if I pay for a 40c cap for next winter I'm not likely to leave before then... and why would I if my price is capped at a manageable level?

You would them pay 40c maximum, and you would have to expect that every winter, but a good idea. The insurance you would pay would be all year too. Much the same as some people over paying the power bill to build up a buffer for winter. Bottom line is you cant expect Flicks super low prices to be every day, and this winter spot issue is normal, actually not that bad according to what was just posted re historical

Lostja

239 posts

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#1822395 14-Jul-2017 12:16

pogo: Perhaps Flick's model could incorporate some kind of spot price insurance in the form of a cap: the consumer pays a up-front premium so that their spot price never goes above 40c (for example). So they would buy at spot but have a fixed upper rate of 40c. Flick could manage this by trading options. This would encourage loyalty as well, because if I pay for a 40c cap for next winter I'm not likely to leave before then... and why would I if my price is capped at a manageable level?

Both i would think. Not looked at in detail but it could be a combination of less generation through hydro in the south island and wind, more generation through larger plant in the North island which take longer to ramp up, the electricity generated costs more and more transfer to the south island as opposed to cheaper south island flowing northwards

gchiu

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#1822396 14-Jul-2017 12:18

Is there a tool that continually refreshes the price that Fick are going to charge?

I tried setting up a spare sim-less phone on the price on Flick's website - going to stick it on the wall so I can glance at it. But it looks like it's a snapshot and doesn't automatically refresh. And the phone screensaver keeps cutting it with the longest delay being 30 mins

Sam91

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#1822402 14-Jul-2017 12:24

tdgeek:

Side topic, what drives the spot price?

is it:

1. The direct effect of much higher fossil fuel generation costs, bumping up the average kWh price, as the FF mix is higher?

2. Reduced Hydro generation kWh's, so price is increased to retain the same revenue on a smaller level of hydro generation?

3. Both?

Copied from my lecture slides from last semester:

My understanding is we're having to use more expensive forms of electricity production to meet the current demand, due to hydro generation being lower than usual. Also, the cold weather has caused demand to increase, and there's no price signals (except for those on Flick), to help reduce the demand, and therefore, lower the price. So it's a combination of low supply of cheaper electricity, and increased demand due to the weather, which is causing the high prices.

Could be totally wrong haha, just going off my limited knowledge from my Eco paper.

tdgeek

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#1822406 14-Jul-2017 12:35

Sam91:

tdgeek:

Side topic, what drives the spot price?

is it:

1. The direct effect of much higher fossil fuel generation costs, bumping up the average kWh price, as the FF mix is higher?

2. Reduced Hydro generation kWh's, so price is increased to retain the same revenue on a smaller level of hydro generation?

3. Both?

Copied from my lecture slides from last semester:

My understanding is we're having to use more expensive forms of electricity production to meet the current demand, due to hydro generation being lower than usual. Also, the cold weather has caused demand to increase, and there's no price signals (except for those on Flick), to help reduce the demand, and therefore, lower the price. So it's a combination of low supply of cheaper electricity, and increased demand due to the weather, which is causing the high prices.

Could be totally wrong haha, just going off my limited knowledge from my Eco paper.

Very good!

What i feel is that is totally normal. Whether RSP's wear the high spot prices or whether they get a fixed deal from the generators, that will also include the highs that we see now, all built in. No free lunch. But Flicksters are being exposed to what happens all year, every year, just that they have no way to level out the highs and lows, they experience them in real time. All of us have the exact same highs and lows, but our RSP's level our pricing to give a level 365 day price. The RSP's may do that themselves with the generator (at a premium) or wear the high cost today knowing it is fine on an annual basis.

dantheperson

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#1822567 14-Jul-2017 16:03

tdgeek:

But Flicksters are being exposed to what happens all year, every year, just that they have no way to level out the highs and lows, they experience them in real time. All of us have the exact same highs and lows, but our RSP's level our pricing to give a level 365 day price. The RSP's may do that themselves with the generator (at a premium) or wear the high cost today knowing it is fine on an annual basis.

Seems there are two sets of highs and lows. There are the intra-day highs and lows, and Flick is very good at exposing that to customers who are willing to time-shift usage away from the peak and benefit from the off-peak lower prices.

Then there is the seasonal highs and lows, particularly winter in dry-years. No one wants to time-shift their winter heating needs into November when the power is cheap. So right now flick users are feeling pain (except for the small number of users that have duplicated their heating infrastructure and can choose between electric or non-electric sources).

So i conclude there a others have here, there is a market for a contract that exposes you to daily peak prices, but hedges you against seasonal extremes.

dolsen

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#1822579 14-Jul-2017 16:22

Now Flick are no longer accepting new customers

https://www.stuff.co.nz/business/94726201/flick-halts-new-customers-as-spot-electricity-prices-surge

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