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465 posts

Ultimate Geek
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  Reply # 1824139 18-Jul-2017 07:54
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tdgeek:

 

k1wi:

 

The rate of posts in this thread seem to be correlated with the price of power, although maybe a quadratic across the mean price. ;)

 

The biggest limitation for Flick users is the small # of people on a floating price. If you had even just 10% of the country floating, they would have had the incentive to conserve at least something during the peaks, and probably would have had a reasonable impact on the peak prices. My understanding is that the price curve gets rather steep towards the 'top' so even a small reduction in demand would decrease prices substantially. Which is the real benefit of the price signalling.

 

The game changer of course would be something like a price forecast aware heat pump that preheats a little extra before the price spike and lets the house 'go low' a couple of degrees during the peak.  Nest & Ecobee are working with utilities here in the US to provide that. Floating also provides the price incentive for Aredwood's hedging/solar + batteries (my biggest gripe about net-metering). If that can be automated & packaged smartly...

 

Other thought: It's a pity Flick customer's can't fix a proportion of their usage. That is, offer something like a 50/50 fixed/float rate, so half your usage in any given price period is hedged. You could also do something like the free hour of power around fixing/floating - they must have the consumption data now to make that work. Though it would probably have to come at the cost of flick taking a bigger fee per KwH.

 

 

There is a level of incentive. People want to reduce the high winter power bills. I cant see everyone being on a spot price service and dealing with the recent event.

 

If Flick gave a part fixed rate, then off course you will pay a "normal" rate, and if that was 50/50, you halve the annual benefits of ;low spot prices as compared to fixed rates. But you cant expect Flick to charge you a fixed rate while you are chewing through spike spot prices.

 

Historically the recent issue is no big deal,. its been worse. Its normal. Its up to the subscriber to manage it. Conserve where you can, build up a buffer credit on your bill to cater for winter, and self hedging as @aredwood posted   But you cannot expect to get low low spot rates all year then Flick pick up the tab when it spikes.

 

 

Under fixed rate service the incentive is to use less electricity generally, but it creates a very small incentive to the individual to reduce usage when prices are high (as this reduction is collectively spread across the entire customer base).

 

The 50/50 split is a hedge against really high prices - yes it costs you some during low prices and saves you some during high prices, but it reduces the risk (or allows you to choose the level of variation you're comfortable with). It would probably need to be fixed for a set period of time to prevent gaming of the seasons, say 1 year intervals or 1 change per 12 month period with the company, but my point is it doesn't have to be all fixed or all float.  Would a family household be comfortable with doing a partial float? Maybe.

 

I envisage the hour of fixed prices could be say during an hour of the day when you know you usually have some power use that is pretty essential. Given their customer data Flick would be able to price the fixed fee according to their costs.




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Ultimate Geek
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  Reply # 1824141 18-Jul-2017 08:04
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k1wi:

 

 

 

The game changer of course would be something like a price forecast aware heat pump that preheats a little extra before the price spike and lets the house 'go low' a couple of degrees during the peak.  Nest & Ecobee are working with utilities here in the US to provide that. Floating also provides the price incentive for Aredwood's hedging/solar + batteries (my biggest gripe about net-metering). If that can be automated & packaged smartly...

 

 

You can do that now if you wish.

 

There are a few scripts around that can read the predicted price, and they can be used to control a Broadlink controller.  See https://www.geekzone.co.nz/sbiddle/8949


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  Reply # 1824144 18-Jul-2017 08:07
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k1wi:

 

 

 

Under fixed rate service the incentive is to use less electricity generally, but it creates a very small incentive to the individual to reduce usage when prices are high (as this reduction is collectively spread across the entire customer base).

 

The 50/50 split is a hedge against really high prices - yes it costs you some during low prices and saves you some during high prices, but it reduces the risk (or allows you to choose the level of variation you're comfortable with). It would probably need to be fixed for a set period of time to prevent gaming of the seasons, say 1 year intervals or 1 change per 12 month period with the company, but my point is it doesn't have to be all fixed or all float.  Would a family household be comfortable with doing a partial float? Maybe.

 

I envisage the hour of fixed prices could be say during an hour of the day when you know you usually have some power use that is pretty essential. Given their customer data Flick would be able to price the fixed fee according to their costs.

 

 

I get that, and a sound idea, BUT the issue is spot prices. With other providers, you pay a fixed rate, they pay a spot rate. So they wear these high spot price spikes. They may hedge, but they pay to hedge. The fixed rate is based to even out the consumers bill, and it also covers the provider for the infrequent but high spikes. If you fixed 50/50 for a year, then your effectively saying that spot exposure isnt worth it, so lets halve that risk. So why use Flick spot at all? If it was worth it to go 50/50 for the spot price 50%, its worth it to go all spot. IMHO its up to the consumer to hedge themselves so that infrequent high spot prices dont bite. Pay an extra $x per month and build up a credit, to offset the spike. Equip yourself with as much non electricity appliances as is feasible

 

End of the day is Flick worth it 365 days a year?


66 posts

Master Geek
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  Reply # 1824779 18-Jul-2017 21:10
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tdgeek:

 

If you fixed 50/50 for a year, then your effectively saying that spot exposure isnt worth it, so lets halve that risk. So why use Flick spot at all? If it was worth it to go 50/50 for the spot price 50%, its worth it to go all spot.

 

 

Similar to how many homeowners split their mortgage, part fixed 5 years, part fixed 2 years, part floating.  Not everyone is comfortable with 100% risk, but that doesn't mean they only want 0% risk.

 

Also sometimes the combination is greater than the parts.  With split mortgages I get the ability to make no penalty over payments, which means i can fix the fixed portion over 30 year terms, giving me less risk of not making payments when i am out of work, but when i am working I can repay as if it's a 5 year term to minimise interest. And low risk of rate changes as most of it is fixed. For a small amount of risk that the rates on the floating portion may rise (or fall).

 

On a electricity hedging market i'd expect fixing 50% of your bill over summer would cost next to nothing so you still get the low flick rates.  Hedging for delivery over winter would cost a lot more, but you reduce the pain in dry years... It depends how much that comfort is worth to the individual.

 

 

 

 

 

 


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  Reply # 1824795 18-Jul-2017 21:39
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dantheperson:

 

tdgeek:

 

If you fixed 50/50 for a year, then your effectively saying that spot exposure isnt worth it, so lets halve that risk. So why use Flick spot at all? If it was worth it to go 50/50 for the spot price 50%, its worth it to go all spot.

 

 

Similar to how many homeowners split their mortgage, part fixed 5 years, part fixed 2 years, part floating.  Not everyone is comfortable with 100% risk, but that doesn't mean they only want 0% risk.

 

Also sometimes the combination is greater than the parts.  With split mortgages I get the ability to make no penalty over payments, which means i can fix the fixed portion over 30 year terms, giving me less risk of not making payments when i am out of work, but when i am working I can repay as if it's a 5 year term to minimise interest. And low risk of rate changes as most of it is fixed. For a small amount of risk that the rates on the floating portion may rise (or fall).

 

On a electricity hedging market i'd expect fixing 50% of your bill over summer would cost next to nothing so you still get the low flick rates.  Hedging for delivery over winter would cost a lot more, but you reduce the pain in dry years... It depends how much that comfort is worth to the individual. 

 

 

No, no no :-)

 

A 30 year mortgage is a world apart from a few day spot price spike. If mortgage rates jumped to 65% for a few weeks every year, then maybe

 

Your last paragraph sums it up. Dry years don't exist. Its days per year when the lakes and weather combine. In your words, you would wear the high spike as the rest of the year makes up for it. Thats the answer. And if you had the ability to hedge for the spike times, the extra will be huge, not just a lot more. Power providers build that in to their rates over a year. Much like seasonal manufactures that run at a loss on the off season. 

 

Comfort. Pay more each payment. That credit tides you over the high months. Work out the average over a year, /12. Sorted.  Have other options available to reduce electricity usage. Gas, solar. 


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  Reply # 1824820 18-Jul-2017 22:10
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dantheperson:

 

tdgeek:

 

If you fixed 50/50 for a year, then your effectively saying that spot exposure isnt worth it, so lets halve that risk. So why use Flick spot at all? If it was worth it to go 50/50 for the spot price 50%, its worth it to go all spot.

 

 

Similar to how many homeowners split their mortgage, part fixed 5 years, part fixed 2 years, part floating.  Not everyone is comfortable with 100% risk, but that doesn't mean they only want 0% risk.

 

Also sometimes the combination is greater than the parts.  With split mortgages I get the ability to make no penalty over payments, which means i can fix the fixed portion over 30 year terms, giving me less risk of not making payments when i am out of work, but when i am working I can repay as if it's a 5 year term to minimise interest. And low risk of rate changes as most of it is fixed. For a small amount of risk that the rates on the floating portion may rise (or fall).

 

On a electricity hedging market i'd expect fixing 50% of your bill over summer would cost next to nothing so you still get the low flick rates.  Hedging for delivery over winter would cost a lot more, but you reduce the pain in dry years... It depends how much that comfort is worth to the individual.

 

  

 

 

Electricity hedging is bought and sold in Megawatts over an agreed time period. So if Flick were to onsell Hedging to their end customers, They would probably do so in Kilowatts / units per hour or 1/2 hour. How that would work for billing - Say I buy 2KW per hour of hedging at 25c per unit. If my usage over that 1 hour period is say 3KW/Hr, I would pay 25c per unit for 2KW/Hr and the going spot price for the remaining 1KW/Hr of usage. Typically the hedging agreement acts as a price cap on what you would pay for the amount you have hedged for. So if the unit price was actually less than 25c, then that is what you pay.

 

 

 

So in deciding how much hedging to buy, you would first workout how much of your usage you could self hedge for. And then buy enough hedging to cover your loads that you cannot defer or time shift. Or otherwise for your base load. The problem is that the average all electric household has a very spiky demand pattern. So it would be very difficult to figure out how much hedging to buy. Unless Flick or someone else repackages hedging to either KW/Hr per bill, KW/Hr per bill during peak times ect. Instead of simply splitting commercial hedge contracts between lots of customers.

 

Here is my usage during 1 of the really bad spikes

 

Click to see full size

 

Since my usage was so low during the most expensive time, It didn't add that much extra overall to my bill. If I did want to buy hedging, I would probably only want 0.5KW/Hr per hour of hedging. But self hedging is working really well for me. At the time my LPG heater would have probably been on, Using LPG at 16.4c per KW/hr. For lots of people, Self Hedging will probably be the cheapest way of managing price spikes. Combined with time shifting of course.






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Master Geek
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  Reply # 1824825 18-Jul-2017 22:15
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tdgeek:

 

 

 

No, no no :-)

 

A 30 year mortgage is a world apart from a few day spot price spike. If mortgage rates jumped to 65% for a few weeks every year, then maybe

 

And if you had the ability to hedge for the spike times, the extra will be huge,

 

 

I live in Auckland, so my mortgage rate going up 0.5% concerns me far far more than my powerbill tripling for a few weeks.

 

You purchase the hedge in advance, you don't know if / when prices will spike, it's like insurance you can't purchase after the event.  Purchase it well before there are any indicators of a dry year and it wont be huge.


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  Reply # 1824831 18-Jul-2017 22:25
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dantheperson:

 

tdgeek:

 

 

 

No, no no :-)

 

A 30 year mortgage is a world apart from a few day spot price spike. If mortgage rates jumped to 65% for a few weeks every year, then maybe

 

And if you had the ability to hedge for the spike times, the extra will be huge,

 

 

I live in Auckland, so my mortgage rate going up 0.5% concerns me far far more than my powerbill tripling for a few weeks.

 

You purchase the hedge in advance, you don't know if / when prices will spike, it's like insurance you can't purchase after the event.  Purchase it well before there are any indicators of a dry year and it wont be huge.

 

 

There is no dry year. The recent spike was low lakes and polar blast. Others will occur. Not huge? The spot price increase was very large. Build that and any others onto a year, add a premium for risk, thats the extra. Either way you pay the spike, it all depends if you pay it now, or every bill, evened out


83 posts

Master Geek
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  Reply # 1824862 19-Jul-2017 00:04
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At the time my LPG heater would have probably been on, Using LPG at 16.4c per KW/hr.



How did you come the price of 16.4c? I'm assuming that's not a heat-pump equivalent kWh? I.e. they say a heat pump uses about 1/3 the energy to move heat rather than create it, so would that mean the LPG price equivalent would be 3*16.4=49.2c/kWh?

465 posts

Ultimate Geek
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  Reply # 1824866 19-Jul-2017 01:37
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My inspiration for suggesting the ability to fix/float a proportion of the contract came from michaelmurfy's situation (and anyone where they're not completely confident they can manage their usage, like a large household.)  If his sister comes in and turns on everything including the AN/SPY-1 radar during a price spike, then at least he'll only be half as exposed to the spike as if he was fully floated.

 

If you did a 50/50 split (easy math) half the kWh's (of each price period) would be at the fixed price, and the other half of the kWH's (of each price period) would be at the floating rate.

 

If you restrict it to one change a year then you limit the amount of 'gaming' (i.e. fixing more just in case of an expensive winter). Alternatively you could vary the fixed rate per season (as is done here in the US) and allow customers to alter their risk profile once per season. Probably depends on how Flick can purchase power from the market.  The seasonal fixed rate might allow households to dip their toes in with a small float (say 10%), and then more quickly increase it as they became more comfortable.

 

It might even help them with retention during periods as seen recently, when customers hopped over to EK.


83 posts

Master Geek
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  Reply # 1824931 19-Jul-2017 07:17
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k1wi:

My inspiration for suggesting the ability to fix/float a proportion of the contract came from michaelmurfy's situation (and anyone where they're not completely confident they can manage their usage, like a large household.)  If his sister comes in and turns on everything including the AN/SPY-1 radar during a price spike, then at least he'll only be half as exposed to the spike as if he was fully floated.


If you did a 50/50 split (easy math) half the kWh's (of each price period) would be at the fixed price, and the other half of the kWH's (of each price period) would be at the floating rate.


If you restrict it to one change a year then you limit the amount of 'gaming' (i.e. fixing more just in case of an expensive winter). Alternatively you could vary the fixed rate per season (as is done here in the US) and allow customers to alter their risk profile once per season. Probably depends on how Flick can purchase power from the market.  The seasonal fixed rate might allow households to dip their toes in with a small float (say 10%), and then more quickly increase it as they became more comfortable.


It might even help them with retention during periods as seen recently, when customers hopped over to EK.



To do some kind of fixed/float swap might not be as good as you imagine... Either the swap would be agreed a short time before fixed period, in which case the fixed rate would need to be determined by the average floating rate over that period.

So to hedge "weekday work hours" a week in advance would jhave a fixed rate of the average the forecast weekday work hour spot prices. This is not likely to give you any real benefit at all.

Likewise for long term "weekday work hour" fixing - you're just going to get a fixed rate that is approx the average long-term spot price over those hour, which would likely be a lot higher than a normal "full-time" fixed rate.

Another option (as I mentioned earlier in this thread) might be a "cap" on your spot price, but this would involve paying an up-front premium similar to insurance.

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  Reply # 1824943 19-Jul-2017 08:08
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Another event coming end of this week. A big wet this time, although heavy snow in SI, so I guess that won't help the lakes right now


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Master Geek
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  Reply # 1824946 19-Jul-2017 08:16
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tdgeek:

Another event coming end of this week. A big wet this time, although heavy snow in SI, so I guess that won't help the lakes right now



There's actually not much snow forecast for at least the first wave of rain. I read somewhere that a lot of the snow will melt. Have a look at the purple lines here:

http://www.metservice.com/maps-radar/rain-forecast/rain-forecast-3-day

Meow
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  Reply # 1824948 19-Jul-2017 08:16
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I just saw somebody at the train station checking Choice (and if this particular person is on Geekzone then Hi!). I must say I don't miss doing that anymore.

Hopefully pricing lowers... I liked @k1wi response in a suggestion to hedging and think I need to buy a radar now.




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  Reply # 1824949 19-Jul-2017 08:17
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Out of interest, how does Flicks normal spot pricing compare to the other providers?

 

Genesis that we are on is about 24.5c /kWh and 30c per day after discount

 

EK that we are moving to is 20c, 70c.

 

 

 

Flick will vary, but what is the equivalent, and the general range, not including these infrequent spikes


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