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Random samples of writings since 2002 exploring the blocks to the development of sustainable uses of our electrical potential
Grid Meter Evaluator
2009 NZ Parliamentary
Commissioner for the Environment Report on "smart meters".|
Comment (Summary Conclusions - a well intentioned and dangerous document )
April Public Broadcasting in NZ and the "Electricity Market"
March Sustainable Energy Forum Posting
Submission to Meridian Energy Mill Creek Hearings.
The Compassionate Curriculum - Our Electrical Being
Grid/ Meter System Evaluator
2007 -A vision in utility poles
Switchboard Wars (An easy-to-read essay)
Main Switchboard in the 21st Century,
2004 Smart verus Wise Meters
2004 NZ PowerSwitch -Switch-off Time?
Wildlife Fund Alert!
Letter to Amory Lovins and the Rocky Mountain Institute
the Rort and Start the Talk
Are all the reality shows on the box getting a bit boring? Too broke to buy anything off the Home channel? Has the intrigue gone out of the drama programmes? Do you feel there is something missing on the News channels? Don’t fret. You can get it all on the other box in your house. Just set your armchair up down your hallway, put the spotlight on the switchboard and sit back. If your ‘meter’ box is outside, set up your barbecue under it and settle back in your deck chairs with friends and share the experience. There is a revolution going on but, sorry to tell you, you have not been invited to the fun. However you have been given the privilege of paying through the nose for it.
At first you will only notice a couple of clunky looking boxes, some wires, more spiders than live on the Nature channel and lots of dust. A little marked disc spinning in the meter or a tiny blinking light in the lumpy gadget beside it might catch your eye. If you listen carefully, some days you might hear something go click-clunk.
The next thing you will notice is ....well… not very much. So you are going to find it hard to believe it when I tell you that this dusty collection of gadgets links you to the life and welfare of the mountains and the plains and the skies of New Zealand. You are watching a few companies make massive and expensive decisions about that greater environment and energy use while you have been relegated to the passive role of just paying the bill. You are watching your house being designed, your appliances chosen for you and the school curriculum being shaped for your children.
You may find it even more difficult to believe you are observing a war that has been going on for over a century and it could end in the destruction of human civilisation, as we know it. Now that’s epic entertainment for you. Bet you did not realise what a reality show you are part of.
After watching the switchboard for some days or minutes it may occur to ask yourself why you have never been very aware of it before. Why is it not part of your life like the cell phone and the TV remote? The answer is simple. The new owners of the switchboard would rather you did not notice its existence. And if you do notice it, they would rather you dismiss it as a cluster of life-endangering, black boxes that are the domain of “experts” somewhere out there.
But wait, I hear you say, I, or my landlord, owns my switchboard. Don’t I own the switchboard in my house? Well, this will be news for you. You used to own it up till the 1990s but the National Government gave it away and it did not make prime news. Pity because much of your future, and maybe lack of future, is being created in the unfolding switchboard drama and there is a bonanza worth many billions of dollars for the switchboard owners at stake.
To add a little twist to the tale, I will tell you that a gas conglomerate (NGC) now owns well over half of the 1.9 million switchboards in NZ and their control is expanding fast. Much of your NZ future lies in the hands of their bankers. Or as the Government will tell you, in the hands of The Market. More on The Market later.
Bonanza? This talk of bonanza? Yes it is hard to believe that the humble switchboard is key to a fortune and the future. The reason is the coming confluence of at least three great technologies and they are combining at the point in human history when oil and gas prices are set to rocket for our 6 billion people. The owners of the local wiring grid and the switchboards will be most able to ride the wave.
The first technology is PLC or Power Line Communication. This enables the local grid to transmit broadband information and entertainment to every electricity socket anywhere on your property. People have been able to talk to each other through the electricity wires for 50 years. However it has been limited to fairly primitive communications such as telling switches to turn heating systems on and off. Twenty-five years ago, the little community of Heathcote (5000 sw. bds) in Christchurch could even communicate to switch all the main-grid driven functions of a house from meter to meter. Another small community in Palmerston North (18000 sw. bds) were even dabbling with shared burglar alarm systems.
The big problem with using wires carrying large electrical current for communication has been ‘radio interference’ of various forms and now this problem has been nearly resolved. Soon it will be possible to transmit broadband along wires originally designed for transmitting Alternating Current electricity. All readers of this web article will understand what I am saying –it means being able to talk big scale.
The second technology could possibly be described by the boring title of Intelligent Load Response Systems. “Smart metering” sounds spunkier but does not convey the whole picture. With “smart” electricity- monitors, you can check out the amounts and costs of your electricity usage as well as the load or demand for electricity on your local grid on your meter console or your computer. If you own your switchboard and belong to a community-owned network this will present great opportunities.
The downside of this technological revolution is that if someone else owns the switchboard in your house and the local grid, then they will be able to watch and control your patterns of electricity use for their purposes. (In NGC’s case, they can optimise their gas sales.) They can dictate many of your life options. The implications for your privacy are interesting too as the Electricity Reforms were designed to transform you from being an electricity consumer with rights into a tradeable commodity. You, your consumption patterns, the switchboard in your home and the access to your property can now be traded to the merchant that will pay the most strategic price to you.
If you have ever watched a heart or brain monitor on the hospital dramas on TV you will know how the electrical activity is seen in spiky waves running across the screen. There is usually an underlying regularity to it but when the patient is sick, feverish or overexcited the waves go a bit berserk. Electricity demand on the national and local grid is a bit like that.
Now that speculators control and play the “electricity market”, its state of health often looks pretty critical as trader greed and adrenalin rushes kick in. So you hear reports of “spot prices” reaching dollars per kiloWatt hour and theoretically it means the grid system is gasping for survival and the terminal alarms are about to start beeping.
Within very short periods demand for electricity can spike up – such as when everyone gets up at an ad break in the big game, puts the jug on for supper and goes to the loo, thus setting off the city water and sewage pumps as well. Demand for electricity goes back down as everyone sits down again. So you can get the price of electricity varying from two cents to twenty cents per kiloWatt hour within quite a short period.
We are not only in the age of “smart meters” now. We are in the age of “smart” home appliances that can pick up signals off the grid and turn themselves off when electricity is twenty cents a unit and resume activity when the price drops again. The time of day can be broadcast on the network so standby clocks are no longer needed. Turn the appliance on and it will be timed to the second. And don’t worry – good systems will allow you to override them manually if necessary.
The third technology is DG or Distributed Generation. Right from the Edison’s first commercial lighting circuit about 1890 in the home of J P Morgan, the powerful banker, bankers have seen grid-based electricity as the opportunity to control the world’s wealth.
The first decade of electricity grids was dominated by the War of the Currents in which AC won out over DC. The inhumanity of the War is illustrated in one fascinating and macabre story in which the development of the Electric Chair was a key weapon of DC side. Once large grids were in place with bulk-electricity generators, the battle evolved into the Generation War in which bulk-electricity generators have fought to suppress distributed-electricity generators and other competing forms of energy transformers such as solar- based systems.
DG can take many forms. Essentially it involves small generators based close to the point at which the electricity is used. As such they can be relatively efficient in that little is lost in transmission. Owners of the bulk-electricity generators naturally don’t like this as their principal shareholders make fortunes from controlling the bulk flow of electricity. In America they purchased major political broadsheets (commonly called “newspapers”) and radio stations in order to shape state and national legislation controlling electricity generation, building codes, subsidy systems etc.
In New Zealand, all they have to do is buy a few big ads regularly. This flow of funds keeps our present generation of timid editors and politicians in line. The control of the bulk-generator sector of the media is far more complete than that though. They have achieved almost total colonisation of the concept of “power” and, more latterly, the awesome concept of “energy”. Most media people and our universities are now hardwired to image grid-sourced electricity as power and energy itself without question. So much for the possibility of NZ developing a Knowledge Economy.
Despite this overwhelming dominance, isolated innovations in DG have occurred. Be proud of one invention by Christchurch City Council. South Power (Orion) has developed a small gas-fired turbine called the Whispergen. Designed primarily to heat homes, it also generates small amounts of electricity. Orion and Meridian have just signed a $300 million to put 80,000 of them into the European Market.
Photovoltaic cell technology (transforming solar energy directly into electricity) is still expensive but the little research done this far indicates it is far cheaper than all the paraphernalia required to fight wars for the unsustainable use of oil and gas for bulk-electricity generation. Origin Energy in Australia, the new owners of Contact Energy, has just announced a “revolutionary” use of silicon.
The research cost a fraction of what our Government plans to spend advertising its annual Budget or on a naval boat.
Is this just an Origin Energy PR gimmick like their name? I cannot say without knowing what else they get up to. BP makes much of their photovoltaic programme even as they pronounce it “horrendously expensive”. Their PV programme is a fraction of their PR investment portraying themselves as the “green fill-up” and “beyond petroleum” and they invest 50 times its cost exploring for oil in the Arctic alone. In the 1970s solar-focussed research companies were bought up by the fossil fuel sector to “close the enemy down”. And all the solar technology in the world is no use if building speculators can destroy our solar-based generating capacity in our urban areas anyway. As they are doing are doing on scale!
This small-scale electricity generation becomes very potent when developed in conjunction with hydrogen cell storage systems, “energy efficient” dwelling design that makes optimal use of solar energy/thermal barriers and where local communities control their grid. Add to the mix the arrival of broadband communication with smart appliances and switchboards that are able to talk to the grid and we have a revolution with a fortune at stake.
Just a note of caution – if you check out the eurekalert site, remain mindful that any civilisation that attempts to base itself on all the hydrogen hype would be equally unsustainable as is our present one that is based on the nuclear hype of 50 years ago. The bulk of global agriculture is based on oil and gas sourced products now.
The NZ Board War
The Generation War took on a new phase in NZ in the 1990s – just as our local communities were developing truly sustainable technologies and strategies. The Wellington people were early casualties. Taranaki people have just succumbed. Aucklander’s ownership of Vector is under siege. The bankers behind structures like Prime are fighting to get control of grids like Powerco and Vector before people catch an inkling of the real value it in the new age that I describe. Our Government and the media are not going to enlighten the good people of Auckland of Vector’s vast potential value. The Market and its advisers are certainly not going to reveal its real value.
The NZ Herald is not going to tell them. They have just refused to publish, without reason, my short letter summarising the new unrecognised value from this great confluence of technology. Its journalists are paralysed by strictures that “control” and electricity use are the domain of different departments.
Where does that give you an inkling of the vast potential transfers of corporate power and wealth from our communities? No wonder Wellington people got done like a dog by TransAlta et al. following his advice.
Where does the article give you a glimmer of the horror for our 6 billion souls implicit in the coming end our oil/gas based economy and our loss of serious options to avert a disaster?
The point is people who care not whether billions live or die designed our present electricity/gas system. Their lack of compassion is exemplified in the US State Department “Expendables” policy under Henry Kissinger. If it suits their short-term interests they will trigger genocide on scale as we witnessed in Cambodia and East Timor. They are manifest in the likes of Arthur Andersen and Co, principle architects of Enron, OnEnergy and our reformed electricity system. In 1999 they created a ten-year plan for Monsanto to control 100% of the world’s seed resources i.e. global biomass energy. Similarly, this consultancy created plans for Enron to control all the global gas and electricity resources and distribution within two decades.
So what stopped these totalitarian plans? Small communities. People like you and me in our local communities. They refused to buy shonky GE products. They banned unsustainable nuclear technology from their region. They refused to roll over and hand over their electricity grids despite intense media campaigns dumping on them. Of course, these communities are still vulnerable to massive intervention by national Government’s to force them to comply. That is why we have the imposition on our country of something called The Electricity Market with COMPETITION. Or as the Electricity Commission’s web-history prefers to put it
“During the 1990s the electricity industry again experienced massive change through extensive reform initiated by the Government. Today, we enjoy a new competitive electricity market with separated line and generation operations and several large, private-sector players. Businesses and consumers are now positioned to benefit from real choice and competitive pricing.”
I have not space here to show what a multiple lie this term is. However I have just posted a small survey of what the average consumer and their local community now “enjoys”. (I did it as research for part of chapter 7 of my cartoon series Bonus Joules and the Knowledge Economy.) In the survey I use the household switchboard as my measuring stick. Read the survey. Its hilarious as it is tragic. Before the Electricity Reforms, about sixty communities representing all regions in our country and several large corporations participated for most of a century in the electricity market. Now only a few large companies can participate in the market. In the massive 1993 and 1998 market interventions, 99.% of Kiwis were disenfranchised and effectively excluded from it. We have never been under such rigid controls and had so few effective rights since the electricity industry began. This is despite the amazing “user friendly” technology available now.
Another prime architect of our reformed system is Professor William Hogan , described on the net as Research Director of the Harvard Electricity Policy Group (HEPG) This group is “ developing alternative strategies for a more competitive electricity market.” Linda Clark on Nine to Noon struggled valiantly through an interview him and at the end asked “ Why do I always find the subject (the electricity market) fiendishly difficult and it makes my head hurt.?”
Now, in case reading my little survey is making your head hurt too, read the hurried, unedited antidote I fired off to Linda in case she was wondering about her own sanity. My summary message was and is:
It is simple if you understand one thing: it is designed to make your head hurt. Understand this and life will become more simple. Your head will hurt less though your heart may ache a little.
It’s the oldest trick in the book – keep them confused and they won’t know where their wealth went. In the present illusion trick, we are told these old messy bits of wires and poles is a bit of a liability to communities and there are these kind companies (banks) out there that will take them off our hands. We are informed that the in new “free” electricity market we need “big boys” to look after our interests and they will do all the talking for us. And of course, they say they listen to us. Witness the large billboards of the Arthur Andersen clone in the form of SOE, Genesis Energy These proclaim “We Listen We do.”
Listening and talking involves conversations. This is a two way process. Increasingly the ability of individuals and their communities to maintain an intelligent exchange with the grid is being limited. The technology is here for some real fun communication but we are stuck back in early Telecom days. You had to rent your phone and take whatever colour was dictated.
In the 1990s that phone rental was pure cashflow out of our pockets. The annual rental was more than the cost of a new modern phone and in many cases our rental phone was decades old. It certainly did not enable all the innovations like fax and answer machines.
Most electricity meters in NZ are two or four decades old too. Before the Reforms, many communities had plans to upgrade their member’s switchboards with “smart” meters by 2000. The 19thC relics on the switchboards represent a dream cashflow for the lucky new owners – probably over half a billion dollars this last decade. And their ownership of the meters enables of the new owners to dictate so much else of your life.
To summarise your situation now, I will extend the telephone analogy.
Effectively you cannot own and must rent whatever equipment you and your community are given. The reality is that you can invest in as much ‘smart’ technology to run your home as you like but you and your community cannot negotiate directly with your local grid to make use of it. The fragmentation of the ripple response and integrated distribution system is like all the wires in the mouthpiece of your phone have been crossed. If you could talk, it would be on a rigid network controlled by the bankers of a few bulk-electricity generators rather than a system of region-based nodes made resilient by Distributed Generation like the Internet system we enjoy.
At a time when the future of 6 billion souls relies on the creation of sustainable uses of energy, especially in the form of electricity, it is imperative we connect every talent we have in every community. Our local grid is a wonderful resource, especially if we enhance it with all the direct powers of the sun. Let us stop the rort and start the talk between communities and their local grid so peace at least has a chance.
An exploration of the ability of electricity consumers to participate in the electricity market and enjoy the benefits of "smart" switchboards and netmetering. It includes a commentary on how the plight of the average citizen came to pass.
In preparation of the next step of Bonus Joules search for the Knowledge Economy I did a survey of the electricity retailers serving the Wellington region consisted of asking their call centres two questions: "
Will you sell electricity to me I own my own MARIA compliant meters and ripple controls?"
“I am thinking of upgrading my home with some photovoltaic and other generating capacity. It is possible that occasionally I may generate a small surplus. Does your company allow net metering so I can feed that surplus into the grid?”
The summary result is that it is more or less impossible for individuals and their communities to participate in an intelligent way in the electricity market any more. Even the relatively “dumb” ripple relay technology that region-based communities employed, often with considerable intelligence, for five decades is now dismantled. * The development of “smart” sustainable consumer oriented switchboards and dwellings are effectively impossible now. The new electricity system seems to work directly against the development of a Knowledge (Sustainable) Economy.
The survey was directed at the call centres. These tend to represent real company policy whereas small print policy is often written to keep regulators happy. It’s the reception your average punter or their draftie or sparkie might get. In most cases operators had not been asked these questions before and had to get advice from their managers. The term ‘netmetering’ was novel to them. All call operators, with one exception, were extremely helpful, pleasant to talk to and interested in the ideas.
Genesis Energy (Government owned)
The answer was not clear. It seemed they cannot supply me with electricity through my own MARIA compliant meter and I would need to go to NGC, their contracted meter owners, and ask their permission to use their meter for net metering purposes. The operator could not explain why it is any concern of NGC what way the meter is revolving. He also said I would need to contact United Networks, my local grid company, to see if they are happy for me to contribute to the grid.
He suggested I would not find any retailer prepared to supply to me
He asked that I call back to a high level at the call centre and let them know what I found out from NGC and United Networks as Genesis would be very interested to learn their responses.
I am not permitted to own my own meter as “ the meter needs to be owned by the retailer and a person cannot own it themselves.”
“With regard to netmetering we are not offering that due to the fact it makes the meters go backwards. They are looking at opportunities to introduce it, but no, at the moment we are not offering anything like that.”
Comment: If meters have to be owned by an electricity retailer then how come a gas company owns most NZ switchboards? Netmetering, of course, exploits the ability of meters to revolve in either direction.
I was intrigued that I listened to the same 4-5 Beatles songs that I had listened to waiting for attention at Contact Energy and asked of the coincidence. It seems the same call centre serves both retailers and identical conditions apply.
I.e. I cannot own my own MARIA compliant meter and net metering is not an option.
TrustPower is happy to supply me with electricity through my own meter- all they need is the transfer of the ICP number.
The call centre did not know if policy allowed netmetering and asked to transfer me to “generation”. There I spoke to a most interested person who said that as I lived in Wellington I would have to speak to my local lines company – United Networks.
Meridian Energy (Government owned)
Meridian is happy to accept any meters that are MARIA compliant
Meridian does not do netmetering. When I asked why not, the operator said it is Government policy. The government owns Meridian and most of the other retailers with the exception of the likes of Contact and it also owns TransPower and it does not want it.
I asked does this mean that if I generate a few extra units of electricity I cannot feed it into the grid and was told “no, you cannot.”
Comment: I have been informed the small print in Meridian’s contract says a customer must notify them of any electricity generation on the property. People with solar powered computers and path lights could be in breach of the contract, as could farmers with electric fences.
Mighty River Power (Government owned)
I did not survey this company, as their call centre does not serve my region.
Natural Gas Corporation. NGC (Owners of most switchboards in Wellington and over a million of the national total of 1,892,377 Million switch boards **April 2004 **.)
The board operator refused to refer me to any one, as “We do not talk to the public.” I explained that Genesis had referred me to NGC but again the curt reply was “We do not talk to Genesis customers – you will have to talk to them, thank you.”
TrustPower recently transferred their ownership of 6000 Wellington and Christchurch switchboards to NGC without informing the owners of the buildings. Ownership of switchboards has very serious implications for the property and personal security of electricity consumers. The new owners inherited unique access to properties without the safeguards the community owned structures provided. Ownership also affects how a consumer can use electricity in the design of the building and its appliances. So I asked if the fact that NGC now owns the switchboard in my kitchen does it surely not make me one of their customers and was told, “No, it does not.”
United Networks - Vector (Owner of Wellington electricity grid.)
The person I was referred to was most interested in my inquiry and had not received one from a potential small-scale electricity generator. He had had dealings with a couple of prospective small wind farms. He asked for a week to find out what he could.
When I contacted him two weeks later he was not able to add much. The company has a working party based in Auckland that is looking at the issue and he would try to get a member of it to talk about the technical issues.
When I said it makes sense to me that I design my house in conjunction with my local grid owner he agreed. He then went onto say “However our legal rights end before the switchboard.”
Comment: I think their responsibility and line rights now end at the street connection to a property. However I imagine lines companies must still retain rights to control the flow of electricity beyond that point.
I explained that I had a friend in Queensland who generates a small excess occasionally from his photovoltaic system. Based on that example I did not imagine generating an excess of more than 3-4 units a day. He had not heard of home sized gas fired turbines such as the Christchurch Whispergen or Origin Energy’s developments in photovoltaics.
I spoke to a representative in the division that specialises in monitoring activity in the electricity industry. She explained their work was in the fields of ensuring fair trading and pricing occurs and they do not deal with issues of meter ownership and net-metering at all. I explained what netmetering is and the importance of being able to own your own switchboard in an age of smart appliances and she suggested that the Electricity Complaints Commission might be able to help me find out my rights.
The Electricity Complaints Commission
They know nothing of such issues and only handle complaints after they have been through in-house procedures in the electricity retail companies. They suggested I speak to the retail companies……
Minister for Energy
No reply yet to letter sent October 3 2003. I look forward to his acknowledgement so that I can know he is aware of the issues at all. It may be an issue he is having difficulty grappling with and I have noticed a trend in my correspondence with him that he avoids acknowledging the existence of some issues.
My letter to the Minister did generate a communication from Heather Staley, head of the Energy Efficiency and Conservation Authority
Dear Mr McArthur
Thank you for your email of Friday October 3rd 2003.
Building owners have the right to own their own electricity monitoring, control and response technology now. I suspect many don’t because they are not aware of the value of ownership. I understand however that some commercial building owners are beginning to understand this value and are choosing to purchase electricity monitoring from service providers who have emerged onto the market in the past few years. Fewer however have reached the point where they recognise the value of control and response technology and I share your concern in this area.
The expert in this area was away and I was invited to email my query to him and so I took the opportunity to widen the questions a bit.
Subject: RE: meter/response ownership and netmetering
Thanks for the interesting and thought provoking email.
In reply to your questions I have the following comments:
There is no compulsion on a retailer to accept any meter. They have the responsibility to provide the meter readings from an EGR compliant meter (via a DA) to the NRM. If you can convince the retailer to rent your meter then you have an opportunity to get a return on the investment.
The purchase of excess electricity from small-scale generation is to be regulated in the near future. The regulations have not been finalised and may not be ready before the end of the year.
Ripple control relays are owned by various bodies, depending on the arrangements that were set up when line and energy functions were split in 1999. In some cases the lines companies held on to the meters and the relays. Some held on to the relays. In most cases, the retailers took over the meters and relays. Subsequently NGC became a major meter owner and now owns a significant number of relays and meters.
So, we now have a situation where the relays are owned by meter owners (retailers and independents like NGC) and line companies. However, in all cases, the substation transmitters are owned by the line companies. If you want to install your own relay then you would have to discuss the frequency with the line company and the pricing/rental arrangements with the retailer, unless you have a direct contract with the line company.
I hope this helps.
The description of NGC as “an independent” by the Electricity Commission reveals serious flaws in the construction of the Commission. I do not know who is bankrolling the NGC structure but I do know the banks manage their gas and electricity operations seamlessly.
The fact that NGC already owns over one million of New Zealand’s 1,892,377 (April 2004) switchboards already and is expanding control has serious implications for the use of both gas and electricity use and a wide range of other energy uses. It gives them a dominant control of the electricity market and the public perception of energy use options. At the same time, as my survey shows, communities throughout New Zealand are now effectively excluded from the market. The description of NGC as ”independent” indicates the Electricity Commission will work to exclude community involvement, give a relatively freehand to gas companies and will enhance the most unsustainable nature of the present framework.
The Electricity Commission will be making a serious error too if it believes companies like Energy Intellect will provide consumers with “independent” advice on monitoring/response technology. NGC is a cornerstone shareholder in Energy Intellect. Community groups seeking advice on the construction of systems that serve their regional and national interests best should know the advice is not “independent” of key banking interests.
The innocent observer will see the present situation as a shambles. However if one subscribes to the hypothesis that the arrangement is designed to disenfranchise individual electricity consumers and their communities, it all makes sense. Certainly ignorance, pride and ineptitude had a part to play.
For instance, at the 2000 Government Inquiry into Electricity the chairperson, David Caygill argued that the retailer should own the switchboards (meters and ripple response systems) as “surely they need to know how much electricity was going through the meters.” He may have been impressed by the arguments of likes of the Arthur Andersen and Co construct, TransAlta (CEO Mervyn English, now of the Electricity Commission). This argument made nonsense of the rationale for the reforms and I quote from the Electricity Commissions “history of the electricity industry” on the web.
“During the 1990s the electricity industry again experienced massive change through extensive reform initiated by the Government. Today, we enjoy a new competitive electricity market with separated line and generation operations and several large, private-sector players. Businesses and consumers are now positioned to benefit from real choice and competitive pricing.”
The absolute nonsense is that all other retailers in areas dominated by TransAlta would effectively have to use TransAlta’s meters. It is possible that David Caygill was very naïve of the thousand tricks the incumbent owner can use to subvert the service of other retailers reliant on TransAlta meters –failure to access the meter is not followed up, special reading processes are delayed, meter locations are not recorded with accuracy, jammed/sloppy meters and jammed ripple switches are not identified, failure to record customer board, access and security advice, etc.
The incumbent owner was also at a major advantage in that they had inherited their meters and relays at minimal cost as the valuers put little value on them – most of the stock was over 25 years old at that stage and written off decades ago. Indeed when I have asked people how come such a strategic asset as the ripple response system ended up with certain retailers I was told no one thought about it too much and it was figured that as they were on the switchboards by the meters they might as well be flicked off with the meter i.e. they were seen as having zero value. Of course they did have value if you are a gas company that benefits from peak demand periods – they have value if they are not working.
(People should not confuse the valuations at the time – the key prices were paid not for the switchboards but for the consumers who in the new system had become tradeable commodities. The electricity consumer was not a citizen with rights to basic amenities anymore but a market opportunity that could be aggregated into a tradeable block. FreshStart showed clearly how this theory was supposed to work as did all the Sky deals etc that came with signing up.)
It was obviously a high-risk activity for another retailer to install their own meters because of a combination of “customer churn” and the incumbent’s ability to gazump them. The Inquiry was given clear information of the doubtful ethics of some of new players in NZ electricity industry and it is possible David was motivated by a blind faith that “competition” would somehow transcend it and the common good prevail. Whatever the motivation, David’s argument – which also gifted Telecom the national phone directory and Eric Watson the NZ publishing industry - was a recipe for the creation of a monopoly of NZ switchboards – which is what we now have in NGC. This makes a remarkable lie of the Electricity Commission’s version of history.
What gave birth to such a grossly dysfunctional state?
Going back one step in the Electricity Commission’s history of the electricity industry we read
“1998 Government announced the Electricity Industry Reform Act which included: Instruction to all energy companies to split their retail and lines businesses.”
This would seem to the innocent observer to destroy any intelligence in the systems and undermine the efficiency that the new “competitive” market structure was supposed to deliver. The observer would be right. It was designed to do precisely this so sector interests could maximise their profits off the communities. Several factors were operating:
****Naïve Government policy analysts – probably operating on a similar wavelength as David Caygill.
****Consultants like Arthur Andersen and Co and KPMG preached the ‘universal doctrine” of split structures.
****Bankers such as MacQuarrie wanted more of the action and to be able to get some leverage off regional community wealth. Some of the communities were not the easy “roll overs” and were insisting that they preferred to hang on to the keys to their treasure chests.
****A semi-competitive system was operating and already it was becoming evident that some community-owned structures were far more effective at delivering wealth to their communities. Cities like Christchurch were showing the world how potent a well-run community structure is at generating local wealth, top service, cutting edge innovation, demand management, energy efficiency practice etc. Indeed consultancies were having to admit such operations were exemplars of corporate effectiveness and disproved everything the textbooks said about the ineffectiveness of community owned structures. Already Arthur Andersen’s construct – TransAlta –NGC OnEnergy – was making constant headlines for incompetency and inefficiency within three years of its creation. Even arch opponents of community ownership such as The Dominion and the Evening Post were asking questions. The relative success of such community structures was deeply offensive to the beliefs of the Government and our US sourced “advisors”. So the Government elected to destroy such embarrassing community structures.
****Just as this present “Labour” Government enjoys the billions of dollars of tax it generates from the present electricity structure, the previous “National” Government found the revenue politic too. Communities tended to return their dividends to themselves in non-taxable forms. For instance, Christchurch line rentals were half Wellingtons and that represented extra tax-free disposable income to all levels.
And what hope is there for a return to sustainable practice and sanity? A Knowledge Economy cannot be developed without a Sustainable History. We are our history and if we ignore its strengths then we do so at our peril. It is very revealing that the Electricity Commission’s Timeline of History begins in 1987.
“1987 Electricity Department restructured to form ECNZ – a State Owned Enterprise.”
In other words:
In the beginning there was the Void in which nothing existed and no community breathed and no community created and no community cared and saved for their children and in that Void God, the Minister of Energy, was lonely and wished to see the glory of His reflection and so it came to pass that in the year of 1987 Chicago Economics was born of the Void and this did beget a State Owned Enterprise (SOE) and this did beget…….a right bloody shambles which is a shame because it came at a Time when 6 billion souls faced one of the greatest challenges that such a number living human souls have ever known and in face of dire peril from their dependency on oil and gas access to the great common community wisdom and HousePower was never more needed.
Seriously though folks, this sort of rewrite of history is unsustainable. It is also a stinging indictment of our universities in that they are pouring out people who become so easily clones of Arthur Andersen and Co and who know so little of what made NZ and civilisation generally. It is not only the Electricity Commission that has such a blinkered view. The Parliamentary Commissioner for the Environment (with that rather toxic sounding acronym, PCE – not my comment) history of the electricity industry omits any insight into the role and strengths of community involvement in the industry over 85 years.
Similarly the Consumer Institute, itself an exclusive, “market driven”, “user pays” construct, has little idea of the power of community involvement in sustainable development. If it had it would never have put its name to the “PowerSwitch” PR gimmick. David Russell certainly would not have advised NZers recently that the sale of the Taranaki Trust would make no difference to us. Obviously he has little idea of the battle for control of the switchboards and consequent control of distributed generation, “smart” dwellings and appliances and PLC (An acronym meaning Powerline Communication – a stupid name/symbol for a range of reasons).
So we live with the lie in the Electricity Commission's history of the electricity industry.
"New Zealand's electricity industry is unique because there are very few legislative and Government restrictions about constructing power stations, power lines or supply to customers. The only restrictions are those imposed by the Resource Management Act 1991, the Commerce Act 1986 and the Fair Trading Act 1986 - this explains our electricity industry's reputation as being "subject to light handed regulation".
The 1998 Electricity Industry Reform Act is a massive intervention and restriction on community activity. Even more massive is this restriction from the Electricity Commission’s history of the industry
“1993 Energy Companies Act enacted mandating local electricity and retail bodies to operate as profitable businesses.”
How much more “Polish ship yard” can you get than that? Effectively it eliminated democratic elements in the industry, destroyed many “triple bottom line” practices, suppressed energy efficiency practice, corrupted transparency/promoted “commercial sensitivity” and blocked the sharing of regional solutions to national problems.
The world needs governments that understand that without community nothing human is sustained. We need governments that face up to the potent peril of Post Cheap Oil and set about enabling their communities to find solutions to the risk. A first step will be returning to communities the effective right of communities to own their own switch boards again so they are re-enabled to talk directly to their local grid through agents acting on their behalf.
The Electricity Commission is part way to a sustainable concept with this idea:
“If you can convince the retailer to rent your meter then you have an opportunity to get a return on the investment.”
Oh, while we are thinking of that thing called a switchboard in your house, its time for your annual reminder. Most of you will have just paid another “rental fee” of $50 or so for your old 20-30-40 year-old meter. Wonder what happened to that $500,000,000 pure profit (minimum) that has been siphoned off you this last decade?
It seems a long time ago since Capital Power was testing remote systems that would enable intelligent monitoring at the home level and we were being told meter readers would not be needed by 1998.
It seem a long time ago that Mike Underhill was stomping through the meter readers room at Hutt Mana Energy Board destroying any vestige of morale by telling them “ You are history, yes you are all history.”
You see, that half a billion was going to be used to enable you and your community to hold intelligent conversations with the grid when it made sense for the local grid retailer to make the most efficient use of electricity for their community.
Talking efficiency, it seems a long time ago since the above-mentioned communities and others were teaching our primary children and their parents how to calculate how their use of electricity affects the CO2 content of our atmosphere. Revolutionary stuff but you wont read about it in the history books – it happened in those now dim, old days of 1995.
This is the hurried, unedited letter I fired off to Nine to Noon, the New Zealand National Radio programme. I was concerned that Linda Clark, the host, might start questioning her own mental stability after attempting to make sense of the recent Electricity Reforms. It was also at a time when there was considerable debate as to the wisdom and implications of the US invasion of Iraq.
May 5 2003
I heard your interview with Professor William Hogan from Harvard University who it seems is one of the North American architects of their electricity system in New Zealand.
After the interview you said that you always find the subject fiendishly difficult and it makes your head hurt.
It is simple if you understand one thing: it is designed to make your head hurt. Understand this and life will become more simple. Your head will hurt less though your heart may ache a little.
Examine elements of the new design (new compared to rest of electricity history in New Zealand 1904 –1987.)
It is fiendishly difficult to control loads and optimise generation when the transmitters for hot-water controls (i.e. ripple controls) are owned by one company and the transceivers on the consumer’s boards are owned by another company, both of whom can make tidy short-medium term profits by minimising investment in the maintenance of their property. It is made even more fiendishly difficult by the fact that the owner of the transceiver may have an incentive to maximise electricity sales while the owner of the transmitter has little interest in high consumption and neither suffer medium term penalties for the system’s failure.
*It is relatively simple to control loads and optimise generation when both transmitters and transceivers have the same owners and these owners are the community of consumers who directly profit from the efficiencies gained from high levels of maintenance and operation of the system.
It is fiendishly difficult to know how much electricity is costing you when the price is obscured for so-called marketing reasons by an expanding range of secondary factors like special media and entertainment deals, holiday draws etc.
*It is relatively simple when electricity is retailed as a commodity in its own right.
It is fiendishly difficult for local economies to ensure that all households have light, heating and access to modern technologies from their electricity system when much of the focus of the industry is on ensuring a few capital intensive industries are provided a large portion of available electricity and ensuring a healthy profits are returned to global shareholders in the industry.
*It is relatively simple when the objectives, as manifest in the trust structures that were used to create our national electricity system, provide a relative focus on providing light, heating and access to modern technology to all households. Then it is more possible to have a system in which large electricity users–low benefit businesses like Comalco operate in conditions where they use the nation’s reserve generating capacity rather than the base capacity
It is fiendishly difficult for communities to promote local initiatives in technological innovation and education programmes when the means for doing this are owned by shareholders based outside their community and who may feel that such innovation threatens their medium term interests here and in their home countries.
*It is relatively simple for world leading technology and education programmes to be created by local communities. This is because they are able to tap into a wide range of local talents, passions, skills and funding mechanisms, to exploit local conditions, and to adapt the regional electricity system to serve local needs. New Zealanders excel at this.
It is fiendishly difficult for communities to develop high quality civil defense responses when the owners of the electricity system are based in other regions of the country or the world and are whose shareholders see no value in the investment involved. As people found in the minor Thames’ emergency, it is now fiendishly difficult to attempt to provide/elicit information through 7-8 retailers, none of whom have local knowledge or close communications with the US based headquarters of the lines company.
*It is relatively simple for the owners of locally owned systems to justify investment in civil defence (alternative/emergency capacity) when the shareholders are intimately aware of local risks e.g. earthquake fault lines, potential storm patterns etc.
It is fiendishly difficult for an industry to share information and research when all its component activities are divided into entities, each driven by the profit motive. In this situation company knowledge becomes “commercially sensitive”.
*It is relatively simple for an industry to generate and share information and research when it is driven more by the service motive with little imperative to be “commercially sensitive” and regional components share a national vision.
It is fiendishly difficult for field workers to communicate a range of information to the industry when they are sub-sub- subcontracted to perform only a very narrow prescribed activity and the information may be in conflict with the interests of the contractor and that contractor may have a similar asymmetric relationship with their contractor and that contractor may have a similar asymmetric relationship with their contractor. This fiendishly difficult situation is compounded by the fact that the mechanisms and technology developed for communication are refined to serve only the narrow interests and priorities of the different contractors at each level.
*It is relatively simple for field workers to communicate a range of information to the industry when they are employed by and share an industry- wide culture where that information is seen to serve the interests of the community of consumers, the owners of the industry.
It is fiendishly difficult for consumers and also for honest, service driven people to operate in systems that is amoral, uncaring and driven by short term profit motives such as that created for Americans with Enron and for NZers with TransAlta by Arthur Andersen and Co et al.
*It is relatively simple for consumers and for industry employees when the industry is driven by service motives and is relatively transparent and accountable to the consumers it serves by way of democratic election processes.
It is fiendishly difficult to develop the national data base of an industry driven by “commercial sensitivity” and in which Government supply-side planning is done by one department (Ministry for Development) and the demand-side planning is done by another department (Ministry for the Environment –EECA), neither of whom have much field experience in the electricity industry. The development of a national knowledge base is made fiendishly more difficult by the fact these agencies believe electricity is energy!
*It is relatively simple to develop a national knowledge base when the industry is driven by service motives as described earlier, where there is direct access to field expertise and these people believe electricity is a form of energy.
It is fiendishly difficult to communicate to the Government when its brain is hurting so much that it is convulsing as it attempts to force the electricity system into a so-called free market model. Some erratic signals suggest it remains aware of the vital role electricity now plays in enabling every NZer to have access to warmth, lighting and access to technology. Even more sporadic signals indicate vestigial glimmers of the ability of transparent, coherent, (monopoly) systems to achieve this. The major signals, as manifest in the Government’s gleeful siphoning of funds from the electricity system in the form of so-called profits from its so-called investments, indicate its addiction to the existing fractured, competing market system.
It is relatively simple when the Government is lucid and able to acknowledge that the electricity system functions most effectively when it operates as a transparent, accountable, democratic, community based monopoly and the country is allowed to create it.
It is fiendishly difficult to understand the wonderful value of the concept of energy efficiency when electricity retailers are “rewarding” consumers for saving electricity and protecting the company’s profits by donating money to hospitals and for statues outside them. The implication is that energy efficiency means you end up in hospital and this probably reflects the reality of the company practice. For many people energy efficiency means going without heat and light. Elderly and sick people, often the most patriotic of citizens in responding to national crises put their country before their own well-being and become health bills. Children in particular get injured and burnt to death with candles. A meter reader for decades, I am keenly aware of how essential electricity is to the health of the household psyche. I gave out bills and witnessed the affect as people became distressed to the point of angina attacks, of hacking their children to death (the coroners report hinted at the strong link to the distress I experienced) and had to console another meter reader after he was instructed to cut a consumer’s power off (a corporate error) and went back an hour later to find her with slit wrists.
* It is relatively simple to understand the wonderful value of the concept of energy efficiency when savings generated are returned to a revolving fund to provide consumers access to capital to invest in technologies that reduce peak loads and add resilience to the electricity system. Examples are intelligent meters and substations, intelligent building design, conversion of solar energy and wind power into heat and electricity at point of use i.e. turn houses into generators.
Yes, it is all fiendishly difficult now and the loss of the relative simplicity of the previous systems is reflected in:
o increasing line losses;
o less equitable billing systems;
o less transparency;
o the Thames emergency and worse.
o increasing wasteful practice in electricity generation eg burning gas and in domestic use e.g. chronic dwelling design.
o the zero value given to the huge “sunk investment” and civil defense investments built up by previous generations when the system was sold (Economies in regions like Wellington that have adopted the most fiendishly difficult systems are now at particular risk of failing and already this is becoming apparent.).
o the destruction of world leading, community based education programmes communicating effective strategies for using electricity:
o the stifling of technological innovations (NZ historically was a world leader and in the 90’s was poised to make major contributions to the development of responsive and energy efficient electricity systems using cheap, locally designed, cutting edge technology.
o a “free market system” that offers electricity consumers all choice and no mechanisms to enjoy it e.g. the new wave of electricity monitoring and response technologies we were developing are no longer available to individual consumers.
o NZ before the reforms had a first world system as measured by outages etc. It is now close to third world status.
The situation was beautifully summed up in a very popular Tom Scott cartoon a decade ago when he portrayed some Treasury officials and/or their advisers saying that the electricity system has to be reformed because while it works fine in practice, it does not work in theory.
It is fiendishly hard to understand why a lucid country would demolish such an advanced system as NZ had created over the previous century and I can understand if the cartoon made many heads hurt.
It is simple to understand what happened if you know Treasury officials were by then governed by US think tanks and North Americans had just gained the controlling interest of our electricity system. David Lange recently summarised this period in our history rather exquisitely when he said (maybe I paraphrase) “Americans operate out of self interest… that is what governs them…they decided it was in their interests to tolerate our Nuclear Free Policy ….they were given unparalleled access to our capital.”
As I said in my introduction, our present electricity system has been designed to make your head hurt. It is the age-old trick of colonisers – keep the colonised distracted with myths of freedom and salvation (free markets) and blame things on religious (market) forces. Establish systems of conflict to keep their heads hurting so they cannot entertain a clear idea of their own destiny and resources. Keep the natives bamboozled while you siphon out the goodies.
I will be honest. I am passionate about our National Radio and often my head hurts listening to it these days as I hear the predominant US based commentary on all aspects of our lives. It must be fiendishly difficult for listeners who do not know that most discussion of The Market omits the crucial economic fact that the economies of 5% of the world’s population (the US and the UK) would barely function if the global arms industry ceased to exist. Harvard - Boston academics of all sorts seem oblivious to the fact that the US accounts for and controls over 50% of the global arms trade sales and use. UK may be dependent on over 20% of the trade and use. They also fail to mention that many areas of the US find it advantageous to ignore their advice.
I really congratulate you on the valiant way you conducted a fiendishly difficult interview, Linda, and I hope my letter eases your hurting head. I just wanted to show my appreciation of your efforts.
Kia kaha – go strong