Geekzone: technology news, blogs, forums
Guest
Welcome Guest.
You haven't logged in yet. If you don't have an account you can register now.
Filter this topic showing only the reply marked as answer View this topic in a long page with up to 500 replies per page Create new topic
1 | ... | 94 | 95 | 96 | 97 | 98 | 99 | 100 | 101 | 102 | 103 | 104 | 105 | 106 | 107 | 108 | 109 | 110 | 111 | 112 | 113 | 114 | ... | 120
104 posts

Master Geek
+1 received by user: 10


  Reply # 2036251 13-Jun-2018 22:42
One person supports this post
Send private message quote this post

With a fixed margin which is what Flick ensures itself, the house always wins.

2026 posts

Uber Geek
+1 received by user: 339

Trusted

  Reply # 2036254 13-Jun-2018 22:47
Send private message quote this post

dunnersdude: With a fixed margin which is what Flick ensures itself, the house always wins.

True, although if we take last winter as an example, they face the prospect of losing a large chunk of their customer base and have to carry the same overheads every time spot prices are sustained at a high level. That degree of churn is expensive, so it's very much in their interest to have happy customers.

104 posts

Master Geek
+1 received by user: 10


  Reply # 2036257 13-Jun-2018 22:51
Send private message quote this post

They can't (won't?) take short term losses for a greater long term gain. Which is what traditional retailers do (ride the lows and enjoy the highs).

I was interested in flick and their marketing hype made sense to me.

However with no bill shock protection, I won't be the one that shies away from a model where only Flick is protected. Well explained above by SBQ

7 posts

Wannabe Geek
+1 received by user: 2


  Reply # 2036305 14-Jun-2018 03:47
One person supports this post
Send private message quote this post

SBQ:

 


You can be sure regions that want to own their lines and market share will make it hard for Flick to make a profit as in here in Christchurch, the Orion Network imposes sur-charges on to Flick. There is no stopping them from increasing these non-competitive charges. It may very well be that the Orion Network has contractual relationship with Genesis Energy so that they can sell at a price advantage. 

 

 

This is incorrect.

 

Orion does not impose a surcharge on Flick. They are required to provide all retailers with equal access to their network, which includes charging them (/their customers) the same network charges. All retailers face the same winter peak pricing from Orion, but retailers choose to 'repackage' this pricing to their customers in different ways.

 

Orion could increase its winter peak charges if it wanted to (though it is subject to price control, so would have to reduce other charges to compensate), however this would apply to all retailers, not just Flick.

 

Likewise Orion does not (and cannot) have a contractual relationship with Genesis (or anyone else) giving them favorable terms and allowing them to sell at a price advantage.


SBQ

53 posts

Master Geek
+1 received by user: 4


  Reply # 2036329 14-Jun-2018 08:24
Send private message quote this post

 

This is incorrect.

 

Orion does not impose a surcharge on Flick. They are required to provide all retailers with equal access to their network, which includes charging them (/their customers) the same network charges. All retailers face the same winter peak pricing from Orion, but retailers choose to 'repackage' this pricing to their customers in different ways.

 

Orion could increase its winter peak charges if it wanted to (though it is subject to price control, so would have to reduce other charges to compensate), however this would apply to all retailers, not just Flick.

 

Likewise Orion does not (and cannot) have a contractual relationship with Genesis (or anyone else) giving them favorable terms and allowing them to sell at a price advantage.

 



My point is Flick can not and does not have ways to manage the cost of the line charges in a way to increase their profit margin or pass on any savings to their customers, as their business model is purely just a middle-man of charging a flat rate commission to their customers. They have no tools to mitigate risks such as options contracts, or accounting practices such as depreciation of assets on electrical generating equipment, or being able to own partly or both the electrical generation & the lines transmission. As I mentioned before, the cost of producing electricity for these large companies will always be less than the wholesale rate. 

While price rises are based on EA approval, there is nothing that states they have to ALSO reduce other charges to compensate for rising line charges; otherwise why even ask for a price rise in the 1st place? And generally speaking, price increases presented to the EA are always approved. However, the EA has no control of inter-party contractual agreements for LOWER pricing; we can agree to disagree.

Let me give you an example in NZ where an electricity INCREASE / or an additional surcharge was applied. Read: 
https://www.pv-magazine.com/2016/07/13/new-zealand-electricity-authority-rules-in-favor-of-controversial-solar-tax_100025395/

These are individual people that used solar PV to generate electricity and any excess generation was supplied back into the grid. Their lines company Unison didn't see this fit so imposed a "solar tax". Yep, they just did this arbitrarily. So the solar PV generators took it to the Electrical Authority and you know.. they lost. The imposing of the solar tax was "lawful" as what the article says. Was it ethical? Of course not. But that's how things go in business. 

It's not accurate to say Flick "over the long term of many years" will produce savings for their customers because they're kinda competing at a disadvantage. Again agree to disagree. The large electricity companies that produce their own power is going to want a profit margin on the electricity they sell to on the wholesale market. If there's none, then why bother investing in electrical generations such as the wind farms we see around Palmerston North. For every bit of kW they sell direct to their customer is a saving of profit that would of been lost when sold at the wholesale market spot rate by somebody else. 

I could go on with the example of crude oil prices and airline fuel costs (in the area of how airlines hedge risk on fuel prices) if people don't understand hedging risks via options pricing contracts. 


1683 posts

Uber Geek
+1 received by user: 399

Lifetime subscriber

  Reply # 2036476 14-Jun-2018 12:32
Send private message quote this post

SBQ:

 

Flick can not and does not have ways to manage the cost of the line charges in a way to increase their profit margin or pass on any savings to their customers, as their business model is purely just a middle-man of charging a flat rate commission to their customers.

 

 

I agree with your main point that Flick has very limited options. But they don't have to "pass on savings to their customers" for their customers to save when compared to other suppliers. Many of the reasons are due to the imperfect nature of competition: the prices being compared with can be from eye-wateringly expensive plans; some companies may not be competing as effectively on price in that region; and so on.

 

 

 

SBQ:

 

As I mentioned before, the cost of producing electricity for these large companies will always be less than the wholesale rate. 

 

 

That statement can only be logically correct if there is a price floor (a minimum legal price). I haven't heard that there is a price floor for wholesale spot prices.

 

In practice it will not be true 100% of the time because the spot price has been lower than the cost of generation. For example, in 2017 there were 17 trading periods where the price was nearly zero, just one cent a MWh.
(zone average of $0.01 MWh e.g. https://www.emi.ea.govt.nz/Wholesale/Reports/W_P_C?DateFrom=20170101&DateTo=20171231&RegionType=ZONE&WeightedBy=SIMPLE&_si=tg|prices,v|3).

 

I guess that you could say you're not referring to the fully allocated cost (which is higher) but instead the marginal cost (which is lower) of generation. But I assume not because you talk about profit rather than contribution to fixed overheads.

 

 

 

SBQ:

 

The large electricity companies that produce their own power is going to want a profit margin on the electricity they sell to on the wholesale market. If there's none, then why bother investing in electrical generations such as the wind farms we see around Palmerston North. For every bit of kW they sell direct to their customer is a saving of profit that would of been lost when sold at the wholesale market spot rate by somebody else. 

 

Large electricity companies won't be using spot market prices as the only measure to decide whether to proceed with projects that provide new generation capacity. Their main reason for adding new capacity will be to service their existing and projected customers. Only if their generated power perfectly matched their customers' consumption then they would never have any excess to sell on the wholesale market. In practice they will have power to sell and that power does not have to be sold at a profit as I mention above.

 

 

 

As an aside, who are you arguing with? Most of your comments are not relevant to your quote of @JuanPerez and I couldn't find any text referenced by your quote of "over the long term of many years".

 

 

 

(Edited to correct user reference and sentence in second to last paragraph)


53 posts

Master Geek
+1 received by user: 5


  Reply # 2038482 16-Jun-2018 05:55
Send private message quote this post

SBQ:

 

My point is Flick can not and does not have ways to manage the cost of the line charges in a way to increase their profit margin or pass on any savings to their customers, as their business model is purely just a middle-man of charging a flat rate commission to their customers. They have no tools to mitigate risks such as options contracts, or accounting practices such as depreciation of assets on electrical generating equipment, or being able to own partly or both the electrical generation & the lines transmission. As I mentioned before, the cost of producing electricity for these large companies will always be less than the wholesale rate. 

 

 

That is exactly Flick's model! Rather than have your retailer use contracts and their own generation to smooth spot prices for you, Flick lets you deal with the cashflow issues from being on spot. Yes, the cost of producing electricity for the large companies will often be less than the wholesale rate but that doesn't mean they are passing those savings onto the consumer - at least not domestic consumers (large industrial customers pay a small fraction of domestic rates). 

 

SBQ:

 

While price rises are based on EA approval, there is nothing that states they have to ALSO reduce other charges to compensate for rising line charges; otherwise why even ask for a price rise in the 1st place? And generally speaking, price increases presented to the EA are always approved. However, the EA has no control of inter-party contractual agreements for LOWER pricing; we can agree to disagree.

Let me give you an example in NZ where an electricity INCREASE / or an additional surcharge was applied. Read: 
https://www.pv-magazine.com/2016/07/13/new-zealand-electricity-authority-rules-in-favor-of-controversial-solar-tax_100025395/

These are individual people that used solar PV to generate electricity and any excess generation was supplied back into the grid. Their lines company Unison didn't see this fit so imposed a "solar tax". Yep, they just did this arbitrarily. So the solar PV generators took it to the Electrical Authority and you know.. they lost. The imposing of the solar tax was "lawful" as what the article says. Was it ethical? Of course not. But that's how things go in business. 

 

 

Sorry, I couldn't let this go. The charge is clunky but Unison is signalling that the way networks allocate their charges has to change to accommodate solar PV. 

 

 

 

SBQ:

 

It's not accurate to say Flick "over the long term of many years" will produce savings for their customers because they're kinda competing at a disadvantage. Again agree to disagree. The large electricity companies that produce their own power is going to want a profit margin on the electricity they sell to on the wholesale market. If there's none, then why bother investing in electrical generations such as the wind farms we see around Palmerston North. For every bit of kW they sell direct to their customer is a saving of profit that would of been lost when sold at the wholesale market spot rate by somebody else. 

I could go on with the example of crude oil prices and airline fuel costs (in the area of how airlines hedge risk on fuel prices) if people don't understand hedging risks via options pricing contracts. 

 

 

I respect your opinion about how it might pan out over time for consumers but it is not a given. Take a look at this chart:

 

https://www.emi.ea.govt.nz/Wholesale/Reports/W_P_C?DateFrom=20090721&DateTo=20180531&RegionType=NZ&TimeScale=MONTH&seriesFilter=&_si=v|3

 

It shows average spot prices for New Zealand each month as far back as July 2009 (this is as far back as I could go). The conversion of the y-axis is $100/MWh = 10c/kWh. At times the monthly average price has been as high as 15-16c/kWh but at other times it is as low as 3-4c/kWh.

 

Flick's business model is built on calculations using data like this that indicate consumers would save under their model vs the large retailers. As I said, if they are right, their market share should grow. 


SBQ

53 posts

Master Geek
+1 received by user: 4


  Reply # 2038485 16-Jun-2018 07:58
Send private message quote this post

luckiestmanalive:

 

That is exactly Flick's model! Rather than have your retailer use contracts and their own generation to smooth spot prices for you, Flick lets you deal with the cashflow issues from being on spot. Yes, the cost of producing electricity for the large companies will often be less than the wholesale rate but that doesn't mean they are passing those savings onto the consumer - at least not domestic consumers (large industrial customers pay a small fraction of domestic rates). 

 

 

I think you may have missed my point on hedging contracts. When ever there's an uncertainty in future pricing of a commodity, it's best practise to pay for options or futures contracts to remove the price volatility; another words, it's basically an insurance contract that would otherwise put the company into bankruptcy ie such as airlines buying fuel. If a spike in fuel cost renders air fares to go up 200 or 400%, no one would  fly with them. It's important to note the cost of these options contracts are comparable to insurance contracts so they don't add much (if any) to the price of the commodity. 

However in Flick's case, since the risk has been entirely shifted to the consumer, any price spike won't hurt them and overall, most customers may complain and would put up with it in the short term in hope that in the future, prices will be lower. As I implied before with the door knocking retailers, I explained there's a "Transition Cost" in getting anyone to switch over (ie a small 2 or 5% savings won't do it) - so it's Flick's advantage because customers have a transaction cost when switching retailers (such as the hassles and long waits on the phone). I should mention that the fuel cost on the airline if hedge is fixed which means no matter when they use the fuel, they know how much it costs. This is nothing like pricing electricity in NZ where it changes every 30 minutes. 


Sorry, I couldn't let this go. The charge is clunky but Unison is signalling that the way networks allocate their charges has to change to accommodate solar PV. 

 



It just shows the fact that private companies have the right to do separate dealings with anyone. Even small guys, as in the case with Unison customers, likewise the law doesn't stop Orion from giving a good deal to Genesis on a bulk rate discount. As for Unison signalling a change, well the solar PV users have to realise that there's a cost to installing and maintaining the lines and the EA understands this.  

 


I respect your opinion about how it might pan out over time for consumers but it is not a given. Take a look at this chart:

 

https://www.emi.ea.govt.nz/Wholesale/Reports/W_P_C?DateFrom=20090721&DateTo=20180531&RegionType=NZ&TimeScale=MONTH&seriesFilter=&_si=v|3

 

It shows average spot prices for New Zealand each month as far back as July 2009 (this is as far back as I could go). The conversion of the y-axis is $100/MWh = 10c/kWh. At times the monthly average price has been as high as 15-16c/kWh but at other times it is as low as 3-4c/kWh.

 

Flick's business model is built on calculations using data like this that indicate consumers would save under their model vs the large retailers. As I said, if they are right, their market share should grow. 

 



That chart has the volatility of BitCoin cryptocurrencies!! Just looking at the chart, how do you base a person to work out his day around those price spikes??? It's impossible and part of my argument from before. When the time people NEED to use electricity, they're getting creamed with the price spikes. The times when electricity is cheap.. well they're really not needing much of it. 

I live in Christhchurch, Genesis gives me a fix price on the LOW USER account. After their discount my night rate price is 10.95c /kW/hr (GST not included). As I worked out in the previous post, for me to see any savings with Flick, the spot rate would have to be LOWER than 2.304c. But by that chart, the only time it was lower than 2.304 was way back in Oct 2010 and on most part the averages are a lot higher. So it seems just on the night rate figure alone, I was paying more $ with Flick than if I were to stay with Genesis last year. 

Of course other Flick customers in other parts of NZ may have real savings. But for Christchurch residents, it seems that the bulk of these savings are not there due to Orion's sur-charge in the winter months. 


84 posts

Master Geek
+1 received by user: 9


  Reply # 2038610 16-Jun-2018 11:52
One person supports this post
Send private message quote this post

how do you base a person to work out his day around those price spikes??? It's impossible and part of my argument from before. When the time people NEED to use electricity, they're getting creamed with the price spikes. The times when electricity is cheap.. well they're really not needing much of it. 


It really depends on the user. I have hot water & electric car on a timer overnight. That's big savings. We heat the whole house (ducted heat pump) overnight to about 20 degrees, and automatically crank the heat up at 6am, which again automatically cuts off at 7am. Cheap as. We have kids that wake early so we're up to cook breaky before 7am if we need to. We have a gas heater for peak times (more expensive but don't need to worry about spikes). And we have a stay-at-home parent that can easily cook before 5pm.

That sounds like a lot of hassle but it's not at all. If you can shift your usage away from peak times then Flick is awesome. Otherwise... not so much.

1683 posts

Uber Geek
+1 received by user: 399

Lifetime subscriber

  Reply # 2038621 16-Jun-2018 12:27
One person supports this post
Send private message quote this post

pogo:
how do you base a person to work out his day around those price spikes??? It's impossible and part of my argument from before. When the time people NEED to use electricity, they're getting creamed with the price spikes. The times when electricity is cheap.. well they're really not needing much of it. 


It really depends on the user. I have hot water & electric car on a timer overnight. That's big savings. We heat the whole house (ducted heat pump) overnight to about 20 degrees, and automatically crank the heat up at 6am, which again automatically cuts off at 7am. Cheap as. We have kids that wake early so we're up to cook breaky before 7am if we need to. We have a gas heater for peak times (more expensive but don't need to worry about spikes). And we have a stay-at-home parent that can easily cook before 5pm.

That sounds like a lot of hassle but it's not at all. If you can shift your usage away from peak times then Flick is awesome. Otherwise... not so much.

 

We don't do anything about the spikes. Most days the peak rate only applies for an hour or two and most of the rest of the time we're saving - an average of 20% a week this winter. We only load shift clothes drying with a delay timer so it runs after midnight. We used to do this anyway to reduce our contribution towards peak usage.


162 posts

Master Geek
+1 received by user: 32


  Reply # 2038640 16-Jun-2018 13:14
One person supports this post
Send private message quote this post

SBQ:

 

It just shows the fact that private companies have the right to do separate dealings with anyone. Even small guys, as in the case with Unison customers, likewise the law doesn't stop Orion from giving a good deal to Genesis on a bulk rate discount. As for Unison signalling a change, well the solar PV users have to realise that there's a cost to installing and maintaining the lines and the EA understands this.  

 

 

There is something stopping Orion giving Genesis a bulk rate discount. It's called the Commerce Act and the provisions around anti-competitive practices. The real issue is that Orion bill electricity retailers at the GXP level based on their share of demand and consumption. This however doesn't translate well to ICP level billing which every retailer is forced to do.

 

 

 

As for the Solar Tax mentioned before, it IS NOT A TAX - lets get that straight. Every consumer needs to pay for a connection to the local distribution network and this connection needs to be sufficient to meet peak demand. However, because of how electricity billing happens in NZ this is often passed through as a consumption charge instead of demand. Think about it in the sense of your internet connection. Generally you pay for the capacity (e.g. 200 Mb fibre and a set level of consumption).

 

When consumers take on Solar they still have the need for the capacity on their home connection but their overall consumption will reduce, meaning that whilst they have the capacity stress the network the same as any other consumer their net consumption will drop. The Lines Company implemented demand based charging and it turned out horribly because consumers that lived in the area permanently were cross subsidising holiday home owners.

 

Also, every generator in NZ (even the big ones) has to pay a connection charge to the grid (often in the realm of $15,000/MW/year) in order to inject into the grid.


3110 posts

Uber Geek
+1 received by user: 1205

Subscriber

  Reply # 2038756 16-Jun-2018 19:02
One person supports this post
Send private message quote this post

If lines companies were allowed to charge higher fixed fees or capacity based fees. They could then stop charging per unit fees. And no per unit fees would mean that the so called solar tax would no longer be needed.

Of course people with solar would still moan. As their savings from self consumed generation would also drop.

The solar tax is a kludge on top of another kludge. The worst kludge being the electricity low user regulations. As the Clark Labour government capped the max fixed fee allowed to be charged by lines companies at just 15c per day. Which also has to pay for the national grid. So the lines companies have to charge per unit fees to meet the cost of operating the network. Then people get solar to avoid paying those per unit fees. So lines fees go up. And low income people are forced to pay the largest increases. As they can't afford solar, can't afford more efficient appliances etc. So in effect poor people are being forced to subsidize the power bills of rich people.





86 posts

Master Geek
+1 received by user: 33


  Reply # 2044574 27-Jun-2018 09:00
One person supports this post
Send private message quote this post

OK, I'll break the silence: Ouch! 

 

Anyone able to provide insight into the causes of the extreme price spikes, other than higher demand?


84 posts

Master Geek
+1 received by user: 9


  Reply # 2044592 27-Jun-2018 09:20
Send private message quote this post

Huntly appears to be running at less than half capacity, and there appears to be spare gas capacity. Anyone know why?

And there is no wind.

2010 posts

Uber Geek
+1 received by user: 767

Trusted

  Reply # 2044593 27-Jun-2018 09:23
One person supports this post
Send private message quote this post

I just switched to Flick this week to see what it's like.

 

So far, it's been fun hehe.

 

 

 

Edit: I can't understand anyone complaining about price spikes.  IT SAYS RIGHT THERE WHEN YOU SIGN UP IT MIGHT HAPPEN.


1 | ... | 94 | 95 | 96 | 97 | 98 | 99 | 100 | 101 | 102 | 103 | 104 | 105 | 106 | 107 | 108 | 109 | 110 | 111 | 112 | 113 | 114 | ... | 120
Filter this topic showing only the reply marked as answer View this topic in a long page with up to 500 replies per page Create new topic

Twitter »

Follow us to receive Twitter updates when new discussions are posted in our forums:



Follow us to receive Twitter updates when news items and blogs are posted in our frontpage:



Follow us to receive Twitter updates when tech item prices are listed in our price comparison site:



Geekzone Live »

Try automatic live updates from Geekzone directly in your browser, without refreshing the page, with Geekzone Live now.



Are you subscribed to our RSS feed? You can download the latest headlines and summaries from our stories directly to your computer or smartphone by using a feed reader.

Alternatively, you can receive a daily email with Geekzone updates.