The Dim-Post

April 19, 2013

Hideous graph of the day, yes it’s about electricity edition

Filed under: economics — danylmc @ 10:06 am

Sorry. Especially if you’re trying to look at this on your mobile phone. Anyway, this shows change in household electricity prices adjusted for inflation across the OECD since 1990. New Zealand is the red one, and we have had some of the largest increases. Other relevant or interesting countries also colored. Look what happened to lucky little Slovakia (purple) when they privitised their electricity market in the late 1990s.

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30 Comments »

  1. Too many shades of grey…

    Comment by MikeG — April 19, 2013 @ 10:15 am

  2. Danyl,you should give that graph a decent burial and start again.

    Comment by Dave Guerin — April 19, 2013 @ 10:22 am

  3. Source? Also what are all those lines going up since 2009? Labour told us they were all going down, shurely shome mishtake.

    Comment by Dave — April 19, 2013 @ 10:27 am

  4. Interesting that Slovakia seems to plateau after about 2003-2004, whereas NZ and Sweden keep on trucking upwards. So Slovakia might be more of a one off adjustment post privatisation, which looks rather different from NZ. NZ actually declines slightly between 1997 and 2000, but has seen pretty much constant growth since then. I think Max Bradford’s reforms first hit in 1998.

    Comment by Dr Foster — April 19, 2013 @ 10:29 am

  5. South Korea is the interesting one. I believe they instituted a buying policy similar to the one being proposed?

    Comment by Gregor W — April 19, 2013 @ 10:30 am

  6. Danyl,you should give that graph a decent burial and start again.

    I did apologise. I just couldn’t figure out which countries to exclude without making it look like I was jooking the stats.

    Comment by danylmc — April 19, 2013 @ 10:32 am

  7. South Korea is the interesting one. I believe they instituted a buying policy similar to the one being proposed?

    Only in an attempt to foster greater integration with their compatriots in the North (according to Steven Joyce). Anyway, their policy must have resulted in widespread power blackouts due to insufficient building of supply to meet demand, with consequent devastating impact on South Korea’s industrial and economic performance. What’s that … http://www.indexmundi.com/g/g.aspx?c=ks&v=79? Oh.

    Comment by Andrew Geddis — April 19, 2013 @ 10:42 am

  8. Digging a little deeper, South Korea also gets most of their energy (95%+) from thermal and nuclear energy. No idea how big a part to play that has on their power prices. The biggest player KEPCO appears to be fully vertically integrated as well (generation to distribution), although only 51% state owned.

    Comment by Gregor W — April 19, 2013 @ 10:49 am

  9. I think it would be interesting to see graphs like this adjusted for cost of production as the publics concern is that they may be being abused, especially when the infrastructure in question was mostly built by their taxes.

    If Slovakia for instance reflects a move from subsidised to user pays then it isn’t as scary as user pays to user pays more to user pays for unneccesary profiteering in a monopoly/oligopoly.

    Comment by Fentex — April 19, 2013 @ 10:55 am

  10. It *would* be a tremendously useful graph, Danyl, but I’m afraid I’m buggered if I can tell the difference between Denmark’s Ash, Mexico’s Steel and Portugal’s Gunmetal Grey.

    Comment by Rory MacKinnon — April 19, 2013 @ 11:18 am

  11. So, this shows the % change from multiple prices, influenced by multiple variables at some arbitrary point in 1992.

    Moreover, presumably it’s showing the % change in power prices paid by individual consumers and ignores power generator revenue received from other sources, (e.g. implicit and explicit government subsidies)

    Very mucky, very emotional. I’d just leave it alone. Nobody talks sensibly about power prices anymore.

    Comment by Andrew M — April 19, 2013 @ 11:22 am

  12. I don’t think looking at percentage change tells us much but we’ve been tracking Sweden and doing slightly better.

    But it missed out all the interesting information to make a comparison.

    Comment by NeilM — April 19, 2013 @ 11:24 am

  13. Also.. Doesn’t your wife work in the media comms team for the green party? Can we expect strict adherence to GP policy promotion strategies in the lead up to 2014?

    Comment by Andrew M — April 19, 2013 @ 11:35 am

  14. Nine to Noon this morning,”In 2009, the Commerce Commission investigation released an investigation into the electricity market. Professor Wolak estimated that electricity generators used their market power to earn $4.3 billion more in six and a half years than what should have been the case in competitive conditions.”

    [audio src="http://podcast.radionz.co.nz/ntn/ntn-20130419-0910-the_labour_partys_new_electricity_policy-048.mp3" /]

    Comment by xianmac — April 19, 2013 @ 11:35 am

  15. Also.. Doesn’t your wife work in the media comms team for the green party? Can we expect strict adherence to GP policy promotion strategies in the lead up to 2014?

    Yes. Because when Danyl’s wife worked for the MSM, he was so noticeably biased in favour of that institution. You dick.

    Comment by Andrew Geddis — April 19, 2013 @ 12:00 pm

  16. Doesn’t really work as a comparison… knobmuncher.

    There has been a noticeable shift in this blog’s theme over the past year or so. Can’t blame a guy for speculating on the cause. The NZ blogosphere doesn’t really need another party proxy blog.

    Comment by Andrew M — April 19, 2013 @ 1:02 pm

  17. dpf wins graph battle http://www.kiwiblog.co.nz/2013/04/electricity_prices.html

    Comment by WH — April 19, 2013 @ 1:19 pm

  18. Can’t blame a guy for speculating on the cause.

    Yes I can. Claiming someone is skewing their analysis because of who they are partnered with is a dickish move, whether in relation to Danyl or to Jane Clifton.

    Comment by Andrew Geddis — April 19, 2013 @ 1:51 pm

  19. “Meaningless graph of the day, yes it’s about electricity edition ” There fixed it for you.

    Because surely the relative starting points have some meaning? Frinstance, whoever that lowest black line belongs to: what if their prices were 135% of OECD average to start with? And ours were 82% of OECD average?

    Comment by Clunking Fist — April 19, 2013 @ 2:03 pm

  20. “There has been a noticeable shift in this blog’s theme over the past year or so.”

    Parenthood can do that.

    Comment by Sacha — April 19, 2013 @ 2:07 pm

  21. Some one clever could take all the graphs from both sides of the debate and make a cubist version of the Mona Lisa.

    Comment by NeilM — April 19, 2013 @ 2:25 pm

  22. Where do you get the data from?

    Comment by Dr Foster — April 19, 2013 @ 4:27 pm

  23. The worst graph I’ve seen this year belongs to the WHO’s World Malaria Report, in which 20 countries are all given lines in shades of brown. This is marginally better.

    I do like that NZ is in red.

    Comment by George D — April 19, 2013 @ 5:59 pm

  24. While I’m being helpful, the ggplot2 package for R has an excellent default colour scheme, and wonderful options. I’m just working through it now, and it’s quite rewarding for the minimal effort required).

    Comment by George D — April 19, 2013 @ 6:14 pm

  25. @A geddis

    Danyl and Jane Clifton….? Really? Good goss man.

    Comment by insider — April 19, 2013 @ 7:52 pm

  26. Wouldn’t a graph that showed absolute costs as a % of average income, not % changes, be more revealing?

    Comment by Hugh — April 19, 2013 @ 8:03 pm

  27. Danyl and Jane Clifton….? Really? Good goss man.

    Isn’t it obvious, given the strong pro-Listener bias displayed on this blogsite?

    Comment by Andrew Geddis — April 19, 2013 @ 8:08 pm

  28. Note this shows change in price, so starting points could be very different. Slovakia and Sweden have massive increases according to this but are far from the most expensive retail prices in Europe.

    And it’s not all kimchee and roses in Korea http://www.bloomberg.com/news/2013-01-09/south-korea-increases-power-prices-second-time-to-curb-demand.html

    Comment by insider — April 19, 2013 @ 8:09 pm

  29. A clutch of strawmen, a cacophony of grinding axes and a cringe of false dichotomies.

    Just getting my collective nouns in order before the masquerade of opinions on the Boston bombings begins.

    Comment by NeilM — April 20, 2013 @ 9:50 am

  30. xianmac – Here is a critical piece on the Wolak report: Auckland academics question Wolak report on power profit gouging

    We also take issue with the interpretation of the Wolak report’s estimate of NZ$4.3 billion in market rents. The media has claimed that this represents a transfer of wealth of NZ$4.3 billion from consumers to generators. This is a misinterpretation of the results of the analysis.

    Wolak himself, on p173 note 313, cautions that these figures relate only to the wholesale market. Market rents are a measure of the difference between spot prices and generator costs. Most consumers do not pay these spot prices. During dry years, the actual retail price consumers pay is well under the spot price. In theory, the retailer will turn around and pay the generator the spot price, but since they are vertically integrated, this amounts to an internal transfer of funds between different arms of the same company, with zero net effect. Generators will typically have other fixed price contracts in addition to retail load, so in practice they will only receive market rents as actual earnings for some fraction of their generation2.

    Thus the true transfer of wealth from generators to consumers during periods of high wholesale prices is likely to be much lower than Wolak’s estimate of market rents, even ignoring the way he estimates hydro costs. It may be the case, as Professor Wolak speculates, that high spot prices during dry years will be passed onto consumers in the form of higher retail prices in the future, but this has not been established conclusively by his report.

    Likewise caution is warranted when claiming that recent retail price rises (residential as well as commercial/industrial) are attributable to these market rents. As underlying input prices have risen significantly over the last decade (e.g. gas from NZ$ 3.14/GJ in 2000 to NZ$ 6.3/GJ in 2007), even in a perfectly competitive market, wholesale and retail electricity prices would have risen significantly.

    Then there is this analysis which identifies what they see as the most obvious flaw in the report that their comparison is of spot prices against a textbook perfectly competitive market: Commerce Commission’s Electricity Investigation Seriously Flawed

    The most obvious flaw in the report is that it fails to address the issue of how the market would maintain security of supply if it were to operate according to the benchmark model of a perfectly competitive market. The Commission expresses the view that the electricity market is capable of providing new generation capacity while operating as a perfectly competitive market, a view which is based on assumptions that do not and can not apply in real life.

    Comment by Quoth the Raven — April 20, 2013 @ 3:45 pm


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