Vector Business Tariff Changes Creates Winners And Losers
PRESS RELEASE
20 February 2013
Jeff Weir, Senior
Tariff Analyst, HeavyDutyDecisions.co.nz
Vector Business Tariff Changes Creates Winners
And Losers.
A Commercial Tariff Consultant says
a major tariff rebalancing across Vector’s Auckland and
Northern electricity distribution networks will see
some large businesses potentially paying thousands
more, while others could potentially save
thousands.
Jeff Weir of tariff analysis company HeavyDutyDecisions.co.nz was referring to Vector’s just-released pricing disclosures for Vector’s Auckland electricity network – covering Auckland Central, Waiheke Island, Manukau and parts of Papakura – and Vector’s Northern network – covering North Shore, Waitakere and Rodney.
“In general, the changes more fairly share the costs of maintaining Vector’s networks across different business groups. But the sheer number of different tariffs that apply to some customer groups may have many scratching their heads,” said Mr Weir. Larger connections will see up to eight separate charges for delivery of their electricity itemised on their energy bills.
And the sheer increase in one
tariff in particular – Vector’s Power Factor
charge ¬¬– will “raise eyebrows as well as
power prices”. From 1st April, Vector are increasing their
Power Factor tariff by around 6,500 percent.
“While
that increase is off a very low base, it’s fair to say
that the sheer size of this increase will come as a surprise
to many businesses,” said Mr Weir.
Power Factor is a measure of how effectively businesses convert the electrical current delivered by lines companies into useful output power. “In layman’s terms, the worse your power factor, the harder that Vector needs to work to push electricity through your site. So Vector charge you a penalty if your power factor drops beneath the limit that Vector deems acceptable.”
Around 1000 large businesses across Vector’s networks are already subject to a modest Power Factor tariff. As from 1 April 2013, these sites as well as a further 1,700 connections will be subject to the tariff at this greatly increased rate.
“Vector warned last year that an unspecified increase in this charge was on the way, but they probably could have done more to signal the likely quantum in advance…a few weeks’ notice does not give businesses a heck of a lot of time to get their heads around this.”
Mr Weir says that increases in tariff changes on Vectors’ Auckland network will probably be fairly modest for most businesses. But around 340 medium to large sites on Vector’s Northern network will be particularly impacted by changes, both positive and negative.
“In addition to the Power Factor increase, these 340 connections also face a 19% increase in their Demand Charge, and a 10% increase in their Capacity Charge on average. So that’s a potential triple-whammy. However, there’s some good news too: these 340 customers will see their Fixed Daily Charge decrease by an average $3,400 per year under this rebalancing.”
Whether these sites will come out better off overall will depends largely on what kind of equipment businesses operate, and how smart they are about managing their energy use around Vector’s tariffs, says Mr Weir.
“Many affected businesses on both networks could mitigate their exposure to some of these tariffs, or even avoid them altogether. For instance, businesses pay no Peak Demand or Power Factor charges on any electricity they use before 8am or after 10pm. So instead of firing up your air conditioning or industrial furnaces at 8am when lines charges and underlying energy rates are high, fire them up a bit earlier, when your total delivered electricity cost is much, much cheaper by comparison.”
Even if sites can’t easily shift load to cheaper
periods, installing power factor correction equipment could
be a great investment if poor power factor is an issue.
“This might also help decrease their exposure to Capacity
and Demand charges as well.”
Mr Weir says that while
the new tariffs are complicated, they seem a progressive
step towards rewarding businesses for making the right
decisions about their energy use.
“And the rebalancing was probably long overdue – some businesses on Vector’s Northern network in particular seemed to be paying a lot more than others simply because they happened to be in a certain customer group. This rebalancing helps address that”.
--
FURTHER INFORMATION
•
Lines charges are what you pay to your local lines company
to deliver your electricity from the national grid and
across their network to your site, and typically account for
around 35 – 45% of many electricity bills. Lines companies
put their customers into different categories – called
load groups – depending on how much electrical load a site
is likely to use. The particular load group your lines
company puts you in is often determined by the size of the
main fuse on your switchboard, and the type of metering you
have. But the appropriateness of that fuse size might not
have been checked in years, if ever.
• Line
companies generally change their prices on the 1st of April
each year. While they have to work within Commerce
Commission guidelines in terms of how much profit they make,
how they divvy up their charges amongst different customer
groups is largely up to them. Consequently, often they’ll
make changes to their tariffs that radically alter
the economics of one load group compared to another.
•
Lines charges for domestic consumers and smaller businesses
are usually bundled in to the rates your electricity
retailer quotes you. Lines charges for larger customers with
Time-of-Use metering are usually itemised separately on your
energy invoice by your energy retailer.
•
Vector operates two electrcitiy networks
o Vector’s
Auckland electricity network covers Auckland Central,
Waiheke Island, Manukau and parts of Papakura. Lines charges
on this network are subject to a 10% prompt payment
discount.
o Vector’s Northern network covers
North Shore, Waitakere and Rodney. Lines charges on this
network are NOT subject to a 10% prompt
payment discount.
• Vector’s latest pricing
documents and disclosures can be accessed at:
o http://www.vector.co.nz/corporate/disclosures/electricity/electricity-pricing
o http://www.vector.co.nz/electricity/our-pricing
Network | Customer Group | Code | Tariff 1/04/2012 | Tariff 1/04/2013 | Increase ($) | Increase (%) | Indicitive cost increase | Quantum | Number of connections
(as at 1/11/2012) |
Auckland | ABSN | 24UC | $0.0850 | $0.0744 | -$0.0106 | -12% | -$106 | Per 10,000 kWh | 34000 |
FIXD | $0.5333 | $0.8889 | $0.3556 | 67% | $130 | Per Year | |||
AHVH | CAPY | $0.0342 | $0.0334 | -$0.0008 | -2% | -$29 | Per 100 kVa of capacity | 110 | |
DAMD | $0.2708 | $0.2840 | $0.0132 | 5% | $482 | Per 100 kVa of peak demand | |||
DEXA | $0.6499 | $0.7100 | $0.0601 | 9% | $0 | Per 100 kVa of excess demand | |||
PWRF | $0.0011 | $0.0731 | $0.0720 | 6,545% | - | Depends on site | |||
SMDY | $0.0142 | $0.0154 | $0.0012 | 8% | $12 | Per 10,000 kWh of summer day usage | |||
SMNT | $0.0023 | $0.0023 | $0.0000 | $0 | Per 10,000 kWh of summer night usage | ||||
WNDY | $0.0393 | $0.0423 | $0.0030 | 8% | $30 | Per 10,000 kWh of winter day usage | |||
WNNT | $0.0019 | $0.0023 | $0.0004 | 21% | $4 | Per 10,000 kWh of winter night usage | |||
AHVN | 24UC | $0.0771 | $0.0666 | -$0.0105 | -14% | -$105 | Per 10,000 kWh | 10 | |
CAPY | $0.0342 | $0.0334 | -$0.0008 | -2% | -$29 | Per 100 kVa of capacity | |||
FIXD | $1.1667 | $1.5778 | $0.4111 | 35% | $150 | Per Year | |||
PWRF | $0.0731 | $0.0731 | New Charge | - | Depends on site specifics | ||||
ALVH | CAPY | $0.0356 | $0.0356 | $0.0000 | $0 | Per 100 kVa of capacity | 1500 | ||
DAMD | $0.2820 | $0.3018 | $0.0198 | 7% | $723 | Per 100 kVa of peak demand | |||
PWRF | $0.0731 | $0.0731 | New Charge | - | Depends on site specifics | ||||
SMDY | $0.0149 | $0.0163 | $0.0014 | 9% | $14 | Per 10,000 kWh of summer day usage | |||
SMNT | $0.0023 | $0.0026 | $0.0003 | 13% | $3 | Per 10,000 kWh of summer night usage | |||
WNDY | $0.0409 | $0.0450 | $0.0041 | 10% | $41 | Per 10,000 kWh of winter day usage | |||
WNNT | $0.0023 | $0.0026 | $0.0003 | 13% | $3 | Per 10,000 kWh of winter night usage | |||
ALVN | 24UC | $0.0802 | $0.0708 | -$0.0094 | -12% | -$94 | Per 10,000 kWh | 1500 | |
CAPY | $0.0356 | $0.0356 | $0.0000 | $0 | Per 100 kVa of capacity | ||||
FIXD | $1.2111 | $1.6670 | $0.4559 | 38% | $166 | Per Year | |||
ATXH | CAPY | $0.0349 | $0.0344 | -$0.0005 | -1% | -$18 | Per 100 kVa of capacity | 820 | |
DAMD | $0.2763 | $0.2928 | $0.0165 | 6% | $602 | Per 100 kVa of peak demand | |||
PWRF | $0.0011 | $0.0731 | $0.0720 | 6,545% | - | Depends on site specifics | |||
SMDY | $0.0146 | $0.0159 | $0.0013 | 9% | $13 | Per 10,000 kWh of summer day usage | |||
SMNT | $0.0023 | $0.0024 | $0.0001 | 4% | $1 | Per 10,000 kWh of summer night usage | |||
WNDY | $0.0401 | $0.0437 | $0.0036 | 9% | $36 | Per 10,000 kWh of winter day usage | |||
WNNT | $0.0023 | $0.0024 | $0.0001 | 4% | $1 | Per 10,000 kWh of winter night usage | |||
Northern | WBSN | 24UC | $0.0673 | $0.0708 | $0.0035 | 5% | $35 | Per 10,000 kWh | 21000 |
FIXD | $0.8100 | $0.8000 | -$0.0100 | -1% | -$4 | Per Year | |||
WHVH | 24UC | $0.0061 | $0.0054 | -$0.0007 | -11% | -$7 | Per 10,000 kWh | 20 | |
CAPY | $0.0146 | $0.0160 | $0.0014 | 10% | $51 | Per 100 kVa of capacity | |||
DAMD | $0.2107 | $0.2556 | $0.0449 | 21% | $1,639 | Per 100 kVa of peak demand | |||
DEXA | $0.5478 | $0.6390 | $0.0912 | 17% | $0 | Per 100 kVa of excess demand | |||
FIXD | $17.7500 | $8.7300 | -$9.0200 | -51% | -$3,292 | Per Year | |||
PWRF | $0.0010 | $0.0658 | $0.0648 | 6,480% | - | Depends on site specifics | |||
WHVN | 24UC | $0.0547 | $0.0501 | -$0.0046 | -8% | -$46 | Per 10,000 kWh | 0 | |
CAPY | $0.0146 | $0.0160 | $0.0014 | 10% | $51 | Per 100 kVa of capacity | |||
FIXD | $4.2900 | $4.3700 | $0.0800 | 2% | $29 | Per Year | |||
WLVC | 24UC | $0.0311 | $0.0389 | $0.0078 | 25% | $78 | Per 10,000 kWh | 160 | |
CAPY | $0.0166 | $0.0183 | $0.0017 | 10% | $62 | Per 100 kVa of capacity | |||
FIXD | $6.0900 | $6.0000 | -$0.0900 | -1% | -$33 | Per Year | |||
WLVH | 24UC | $0.0069 | $0.0062 | -$0.0007 | -10% | -$7 | Per 10,000 kWh | 120 | |
CAPY | $0.0166 | $0.0183 | $0.0017 | 10% | $62 | Per 100 kVa of capacity | |||
DAMD | $0.2389 | $0.2716 | $0.0327 | 14% | $1,194 | Per 100 kVa of peak demand | |||
FIXD | $20.1200 | $10.0000 | -$10.1200 | -50% | -$3,694 | Per Year | |||
PWRF | $0.0010 | $0.0658 | $0.0648 | 6,480% | - | Depends on site specifics | |||
WLVN | 24UC | $0.0620 | $0.0573 | -$0.0047 | -8% | -$47 | Per 10,000 kWh | 640 | |
CAPY | $0.0166 | $0.0183 | $0.0017 | 10% | $62 | Per 100 kVa of capacity | |||
FIXD | $4.8700 | $5.0000 | $0.1300 | 3% | $47 | Per Year | |||
WTXC | 24UC | $0.0280 | $0.0350 | $0.0070 | 25% | $70 | Per 10,000 kWh | 140 | |
CAPY | $0.0149 | $0.0165 | $0.0016 | 11% | $58 | Per 100 kVa of capacity | |||
FIXD | $5.4800 | $5.4000 | -$0.0800 | -1% | -$29 | Per Year | |||
WTXH | 24UC | $0.0062 | $0.0056 | -$0.0006 | -10% | -$6 | Per 10,000 kWh | 200 | |
CAPY | $0.0149 | $0.0165 | $0.0016 | 11% | $58 | Per 100 kVa of capacity | |||
DAMD | $0.2150 | $0.2635 | $0.0485 | 23% | $1,770 | Per 100 kVa of peak demand | |||
FIXD | $18.1100 | $9.0000 | -$9.1100 | -50% | -$3,325 | Per Year | |||
PWRF | $0.0658 | $0.0658 | New Charge | - | Depends on site specifics | ||||
WTXN | 24UC | $0.0558 | $0.0516 | -$0.0042 | -8% | -$42 | Per 10,000 kWh | 30 | |
CAPY | $0.0149 | $0.0165 | $0.0016 | 11% | $58 | Per 100 kVa of capacity | |||
FIXD | $4.3800 | $4.5000 | $0.1200 | 3% | $44 | Per Year |
ENDs