A rundown of the insane stupidity of the now deposed imposter SA Labor "Govt" in following the idiotic Greenies down the gurgler and wrecking their power system.
Now the equally idiotic Federal Labor imbeciles want to inflict the same traitorous Extremist Greeny insanity on ALL OF AUSTRALIA!!!!Why SA's power prices are so high and the potential fixes so riskyRichard Blandy ADELAIDE Tuesday March 07, 2017
ANALYSIS
In this detailed explainer, former essential services commissioner Richard Blandy sets out why South Australia’s power bills are so high and warns that some of the touted solutions to the problem could lead to an economic catastrophe for the state.Be careful what you wish for: some solutions to our power problems may have unintended consequences.
What’s driving your billsAccording to the most recent report of the Australian Energy Market Commission (AEMC), a representative consumer in South Australia paid $1487 for electricity in 2015/16 – a bill which is expected to rise to $1602 in 2016/17, and to $1717 in 2017/18, before falling to $1679 in 2018/19.
Environmental policies – mostly to mitigate emissions of CO2 – cost about $150 p.a. as part of these bills.For comparison, a representative consumer in Victoria paid $1099 in 2015/16, expected to rise to $1107 in 2016/17, and to $1200 in 2017/18, before falling to $1185 in 2018/19 (about 70% of the cost in SA). Environmental policies cost about $75 p.a. as part of these bills (half of what they cost in SA).
What explains these trends and price differences?The Eastern States of Australia form an interconnected electricity market but one split into regions with their own supply and demand conditions. This market is run by the Australian Energy Market Operator (AEMO).
For all intents and purposes, South Australia is a stand-alone region with its own (privately-owned) generation, high-voltage transmission and low-voltage distribution system, but linked by two high-voltage transmission lines (interconnectors) to Victorian generators. Electricity retailers buy electricity from the generators, pay the costs of transmitting and distributing it to their customers, and charge their customers sufficiently to cover these costs and make a profit.
There are markets in each of the four components of the electricity supply chain: generation, transmission, distribution and marketing. The price that a consumer pays for a kWh of electricity (as well as his/her supply charge) depends on the prices formed in each of these markets, which, in turn, depend on the costs and profit margins that give rise to the prices. These costs and profit margins depend on the technologies and competitive conditions characterising electricity’s generating, transmitting, distributing and retailing activities.
In a typical final consumer’s bill, about 45% flows from the cost of generation, about 45% comes from the cost of transmission and distribution, and about 10% comes from the cost of retailing.
Retailing costs are unlikely to be a source of rapidly rising electricity prices because they represent a small proportion of final prices to consumers and there is a high level of competition in this part of the electricity supply chain. Energy Watch shows that there are seven electricity retailers selling electricity to small businesses, and 12 electricity retailers selling electricity to households. Therefore, price rises at the retail level are likely to be cost-based.
By contrast, the transmission and distribution networks are natural monopolies. This means that they could charge very high prices unrelated to their costs and earn significant monopoly profits. Normally, such monopoly networks are either government owned or subject to independent regulation and oversight. The Australian Energy Regulator (AER) sets the maximum amount of revenue that ElectraNet and SA Power Networks (SAPN) can earn in order to make a profit just sufficient to provide efficient transmission and distribution services.
The AER looks at the projected demand for electricity, replacement and investment in pylons, cables and other infrastructure, operating and financial costs, and network reliability and safety objectives.
Has the AER has been asleep at the wheel? In particular, has the AER inadvertently allowed the Regulated Asset Base (RAB) to increase too much so that transmission and distribution costs are too high? Some critics of the regulatory system for transmission and distribution would abolish the “locked in past investment history” RAB-based regulatory process, in favour of a system that better took into account major potential economies, as these emerged, writing off past investments that became uneconomic, like competitive businesses do.
Read the rest of this sick account of Greeny led Labor's imbecilic following the Extremist Greenies down the gurgler here.https://indaily.com.au/news/analysis/2017/03/07/why-sas-power-prices-are-so-high...