The great energy debate

[Big Shed]

Privatisation is not the golden egg.

No it isn't, but then privatisation was to a large extent the result of public utilities becoming inefficient and carrying lots of deadwood.

Just because an organisation is publicly owned doesn't necessarily mean it will do a better job.
I was living in SA when the State Bank collapsed and it wasn't pretty and that collapse took SA and the people of SA a long time to recover from.

The biggest problem with all these privatisations is that to a large extent Governments have abandoned their supervisory and regulatory roles and they are keeping their fingers crossed that private companies will do the right thing. Trouble is that "doing the right thing" means different things to different people. Maximising profit for shareholders is doing the right thing for a private company, delivering the right outcomes is doing the right thing for Governments and the people at large.

[Bushmiller]

I think I may have mentioned before that in the NSW system, where I spent some time before moving to QLD, the Electricty Commission of NSW was formed to provide continuity of supply. Once a competitive market was created the focus moved to money. This was exacerbated as more stations went private.

Talking of money, in my earlier post I said that $14,000equated to $1.40/KWhr. That was not quite correct: It actually equates to $14/KWhr!!!!!!!! How would you like to pay that instead of 25c?

Regards
Paul

[A Duke]

Hi swk,
The Camel is a Horse designed by comity.

[Bohdan]

No it isn't, but then privatisation was to a large extent the result of public utilities becoming inefficient and carrying lots of deadwood.

Just because an organisation is publicly owned doesn't necessarily mean it will do a better job.
I was living in SA when the State Bank collapsed and it wasn't pretty and that collapse took SA and the people of SA a long time to recover from.

The biggest problem with all these privatisations is that to a large extent Governments have abandoned their supervisory and regulatory roles and they are keeping their fingers crossed that private companies will do the right thing. Trouble is that "doing the right thing" means different things to different people. Maximising profit for shareholders is doing the right thing for a private company, delivering the right outcomes is doing the right thing for Governments and the people at large.

Unfortunately we need to define "better" in terms of the community at large and apply that to our planning processes. They were inefficiently carrying a lot of dead wood but delivering the goods, now efficiently making a profit at the expense of the customer and delivering the goods is secondary.

A perfect example of our myopic governments planning abilities.

[ian]

and the Telco industry as it has in the banking industry. Banks lend more capital than they actually have at times, the power generation industry supposedly is dimensioned to accommodate typical load demands. Supposedly! "The system worked within its' design parameters - it's just that we got the parameters wrong."

I'm not sure that anyone will admit to getting the design parameters "wrong".

There is a world of difference between "typical load", "expected Maximum load", "anticipated extreme maximum load" and "an event outside the parameters".

for example there are 84,960 minutes in the months of January and February.
if you are prepared to accept that load shedding might be a necessary network response 1% of the time, then over those 2 months, you would anticipate that the "bunnies" who will have their load shedded, will be without power for around 14 hours.
If you increase the network "reliability" to 99.9%, in respect to the avoiding the need to load shed at the "expected maximum load", someone will be without power for 1-1/2 hours. (And 99.9% corresponds to 1 in 1000.)

[kiwigeo]

So to get back to the design of the transmission system and last years SA event. Who are actually the "designers"?

In the case of South Australia it's the Engineers who work for SA Power Networks.

The root issue IMO is the antiquated networks we are working with. These networks are highly centralized so that if one part of the network gets out of balance it brings the whole network down...we should be moving towards smart decentralized networks. The current networks are also heavily reliant on continuous base load power generators for stability...ie they handle non base load generators with great difficulty. Again the solution is a move towards networks that can handle a wider range of generators.

As an aside the Japanese electricity network doesn't operate on a single frequency like the Australian national grid does.....roughly half the Japanese grid operates on 50Hz while the other half is running at 60Hz.

[Big Shed]

The root issue IMO is the antiquated networks we are working with. These networks are highly centralized so that if one part of the network gets out of balance it brings the whole network down...we should be moving towards smart decentralized networks. The current networks are also heavily reliant on continuous base load power generators for stability...ie they handle non base load generators with great difficulty. Again the solution is a move towards networks that can handle a wider range of generators.

Which only confirms the lunacy of getting rid of most of your baseload power generators before you have implemented a network that can handle a wider range of generators, ie wind and solar.

It is not a good policy to rely on baseload power in other states as the imminent closure of Hazelwood will only reinforce.

[kiwigeo]

Which only confirms the lunacy of getting rid of most of your baseload power generators before you have implemented a network that can handle a wider range of generators, ie wind and solar.

It is not a good policy to rely on baseload power in other states as the imminent closure of Hazelwood will only reinforce.

Agreed......so when are the politicians going to stop waging their war against non thermal generated power and start pushing for upgrading of networks so they can handle same???

[Bohdan]

Agreed......so when are the politicians going to stop waging their war against non thermal generated power and start pushing for upgrading of networks so they can handle same???

To upgrade the networks costs money, no profit in that.

Electricity prices will go up, people will be unhappy and take it out on the pollies at election time so no possibility of the pollies pushing for anything.

[kiwigeo]

To upgrade the networks costs money, no profit in that.

Electricity prices will go up, people will be unhappy and take it out on the pollies at election time so no possibility of the pollies pushing for anything.

Long term there is profit in operating Smart decentralised networks. There is less maintenance and such networks don't collapse when one part of the network goes down......the suppliers spend less time paying out compensation to consumers who've lost their power for days. Long term there are huge savings for the network operators.

[swk]

In the case of South Australia it's the Engineers who work for SA Power Networks.

Nope.

SA Power Networks is the distribution provider. They got rid of their last engineer with transmission knowledge a couple of years ago (non core business, you know).

Electranet is the Transmission provider. However, they are one of those companies which largely outsource any design work. They do have people who can analyse the system behavior and they do provide advice to AEMO in that area (I believe) and can in a limited way act on behalf of AEMO.

SWK

[kiwigeo]

Nope.

SA Power Networks is the distribution provider. They got rid of their last engineer with transmission knowledge a couple of years ago (non core business, you know).

Electranet is the Transmission provider. However, they are one of those companies which largely outsource any design work. They do have people who can analyse the system behavior and they do provide advice to AEMO in that area (I believe) and can in a limited way act on behalf of AEMO.

SWK

I stand corrected....so many companies involved I get them mixed up. My late neighbour was an Engineer who worked at Electranet....over the years I had some very interesting conversations with him about electricity networks

[swk]

To upgrade the networks costs money, no profit in that.

Well, actually...

You maybe have heard the term "gold plating" in the papers a couple of years ago. (How quickly we forget)

Both the transmission companies and the distribution companies in Australia get a payment, called TUOS (for transmission) or DUOS for distribution. The payment was negotiated originally with their individual state governments but subsequently taken over by AER (the Australian Energy Regulator). Part of that payment is based on the capital value of the network.

Consequently if a network provider increases the capital value of their network, they get paid more, so upgrading the network _can_ make a profit.

SWK

[Big Shed]

Sounds to me that all that the so-called "privatisation" has done is added a couple of extra layers of bureaucracy, adding to costs and infinitely adding to the number of possibilities for "passing the buck".

After WWII the whole electricity industry was nationalised because it was very fragmented and didn't deliver positive outcomes for the consumer.

It seems that it has taken us 75 years to come full circle.

[swk]

... privatisation was to a large extent the result of public utilities becoming inefficient and carrying lots of deadwood.

"Inefficiency" and "deadwood". Good terms to chuck around by pollies. Much as they are chucking around stuff about "supply security" now.

Was the old ETSA inefficient, did it have heaps of people sitting around doing nothing?
(the answer to this question is probably true for other state electricity bodies too)

Well, the old ETSA had about 6000 people (from memory, might have been a bit less). I cant recall if that was before or after the "right sizing" before the privatisation. But in any case prior to that privatisation the numbers in ETSA were reduced. In the years following the sale _all_ of the individual businesses that I was aware of in generation, transmission and distribution put people back on. The state government obviously cut hard and too far as part of the sales process. They could have done this any time, they didn't have to do it because of a sale.

But how do we compare today. You can find most of the data for employee numbers in the annual reports.
So SA Power network, about 2500 employees
Electranet about 300,
Torrens Island about 150
Northern Power Station (till it was shut down) about 120
Pelican Point about 40

I dont know figures for other businesses, but that's about 3000. So are we at half levels of what we were 15+ years ago?

Well, with the exception of SA Power Networks (and Electranet?), the power stations (and wind farms) all have some corporate governance wrapped up in Engie, AGL, etc. How do we count them and add their numbers in?
All of the electrical sales are done by providers (AGL, Lumo, Origin etc) who run multiple sales staffs, management, corporate functions etc
ETSA used to look after the licensing and electrical work in SA. That's done by the State government through OTR (technical) and Consumer affairs, for licenses, now.
Planning and regulation is now done by AEMO (500+ employees for the whole national grid) at a federal level and ESCOSA at a state level.
That's just some of the stuff needed by the electrical industry but not immediately obvious at first glance.

But that's not all (as they say on the telly)
Those employees shown in the annual reports, _dont count contractors_.
As I wrote in an earlier post Electranet dont have any designers. _All_ their design work (and construction) is done by contractors (Downer ABB etc). Significant amounts of extra electrical industry related work in South Australia is done by contractors.

Seriously, I have been involved in the electrical industry for 35+ years now, and I am not convinced that the actual "efficiency" is any better. "Dead wood" is a topic for another time.

SWK