West Australian Govt Subsidy Hoax

[Joe Blake]

In another thread I expressed skepticism about government promises for a "feed in tariff", and today I felt justified.

A letter from my friendly local "non-government" utility (ie it's supposed to trying to make its way financially with little or no government support) has informed me that our beneficent government is giving me a 40 cent per unit "feed in tariff" as an incentive to sell power to them. However, in the same letter they point out that due to increased costs etc the cost of selling power to consumers is going to rise, which I expected, and indeed applauded. Since I'm on "Smart Power" I get charged a differential rate depending on when I consume. So far so good.

The sting in the tail is that at the same time as the 40 cents per unit subsidy kicks in, the "buy-back" price for power that I sell is being set at 7 cents per unit.

Under the present system I am receiving parity pricing (less Goods and Service Tax). Ie I receive the same price for exported power as I would be charged to import it.

Some figures under the new system:

Off peak: (9 pm-7am) 365 days a year = 10.78 cents per unit (up from 9.12 cents)
Weekend Shoulder (7 am- 9 pm weekends) = 16.92 cents per unit (up from 14.31 cents)
Week Shoulder (varies with time of year) = 20.42 cents per unit (up from 19.5 cents)
Peak (varies with time of year) = 40.14 cents per unit. (up from 31.97 cents)

So ignoring the government subsidy, Synergy (the supposedly "pay its own way" utility) is now going to be able purchase a peak unit from me at 7 cents and immediately re-sell it at 40.14 cents for a user on Smart Power, or 20.83 cents per unit at the standard (ie 24 hrs per day) residential rate.

Quite a pea and thimble trick. Since the government subsidy has a limited life (10 years - provided the Govt doesn't decide to reduce or remove it as a "budgetary measure" before that time) I'm going to be spending the expected remaining 10 years of my system's life subsidising a non-government organisation.

But, as I said in my other thread, I thought this subsidy was just a political promise, that wouldn't amount to much.

Okay, I'll probably make a shirt load of money for a short period of time, but it's still a rather shabby political ploy. Personally I'd rather forego the 40 cent subsidy and receive parity pricing, if for no other reason than it seems the "fair and reasonable thing" to do, which, interestingly, is what Synergy is (or used to be) bound to do under its legislation.

I guess I'll take the money with a wry grin, knowing that it probably won't be too long before the Federal Government puts its snout in the trough and starts asking me to pay income tax on the subsidy.:sad2: Especially galling since the subsidy is being paid out of my taxes. :eek:

Joe

[Ralph Day]

Joe,
Do not, not, not read about the microFIT program here in Ontario!!! You may stake yourself out on an anthill in protest.

Rob (when he has the time) is installing for himself, I'm waiting for my last electrical inspection before comisioning, and there are thousands of others in the province taking the plunge.

Smart meters, no parity, but 80.2 cents per kwhr for 20 years. But don't read about it!

Rob, imagine the returns with Joe's amount of sun and no rain for years. Sorry about the no rain Joe.

Ralph

[Rob Beckers]

Yeah, I would (almost) stake myself out on an ant hill to get Joe's sun hours (and the 80 cents per kWh that brings in of course). Luckily we don't have any ant hills over here (there's ants, but no hills).:bathbaby:

-RoB-

[Joe Blake]

Sorry about the no rain Joe.

Ralph


:D Not a problem now. Had quite a bit in the last couple of days, even the cockies (ie farmers) are dancing in the paddocks. And the possibility of more at the end of this week.

Doing my daily figures yesterday I generated .8 kWh over 24 hrs on a 1600 Watt system.

But I won't complain too much. My water tank is filled to overflow (for the second time in 2 months).
Joe

[Joe Blake]

Had this letter published in my local community newspaper last week. Don't know whether it will achieve anything but ...


Dear Sir,

The Great Feed in Tariff Hoax

Congratulations to the Government on its great pea-and-thimble trick. While loudly trumpeting its green credentials by introducing its "Feed in Tariff" for electricity generated renewably of 40 cents per unit, in the same letter (from Synergy), I am told that the buy-back price for electricity under the Renewable Energy Buyback Scheme (REBS) is now being set at 7 cents per unit. Previously there was (ignoring GST) parity pricing ie Synergy bought power from me (as a producer) at same price it sold to another consumer. Under this new scheme, however, if I sell a unit of electricity to Synergy at 7 cents (at peak period), then Synergy could immediately resell it at 40.14 cents!!

This "feed in tariff" is being paid back to me, out my own taxes, and because it's a government "grant" it's quite a simple matter for the government to say, well, the budget looks like it's going into deficit, so we'll just reduce/remove the tariff, then I'll be left subsidising Synergy.

Personally, I'd rather not have the Feed in tariff if it's going to mean sacrificing parity pricing.

According to an on-line WA Government FAQ sheet "The Electricity Industry (Licence Conditions) Regulations (2005) places a requirement on Synergy and Horizon Power to purchase electricity generated by renewable energy systems under "fair and reasonable" terms and conditions. ... Synergy has recently reviewed its buyback rate to more accurately reflect the value of the energy."

So how is this fair and reasonable? And what is the real "value" of the energy? If it's worth 7 cents to buy, it should be worth 7 cents to sell.

[Rob Beckers]

Hi Joe,

I'm not quite following what's happening: In your first post you mentioned that there's a new feed-in-tariff that pays 40 cents per unit. I assume that's for PV sold to the grid? A sentence later you mention they only pay 7 cents per unit for feed-in, while charging 40 cents per unit for use at the same time, thus making a profit for the power company.

Since those two sentences are mutually exclusive I'm missing the point somewhere. Could you please explain this a bit more for the more dimwitted amongst us (ie. "me"). :confused:

-RoB-

[Joe Blake]

Rob,

Sorry, I didn't see your last post until just now.

It's a bit of political "smoke-and-mirrors" here. Successive governments of both sides of the political spectrum have been afraid to raise the price of electricity to its "real" cost over the last decade or so for fear of being booted out of their comfy ivory towers by displeased voters. So the taxpayers have been subsidising the costs.

There are two separate issues. One is the sale and purchase of home generated power by the utility ("Synergy/ Western Power" - two separate organisations, one to generate the power, the other to buy and sell it - two sets of executives etc) and the "government" funded incentives to install an alternative power generator.

The current Govt (then the Opposition) promised to give a "feed in tariff" based upon GROSS power generated ie pay a premium price for all power renewably generated, presumably at the inverter rather than the junction box to the grid. A rather fatuous vote buying gimmick, but nevertheless they got elected.

Meantime, Synergy was going to buy any excess power at the current rate based upon whether the generator was using the "SmartPower" scheme (ie paying different prices for power at peak/off-peak times etc). Great. I import a kWh from the grid, it will cost me (or did at the time) about 23 cents (plus GST - goods and services tax). If I imported the power off-peak, it would cost me 12 cents (plus GST). Conversely if I exported a kWh to the grid at peak, Synergy would pay me 23 cents (without GST). In the unlikely event I exported a unit off-peak (that being night time) I would be paid 12 cents.

So having been elected, the Govt suddenly decides (before the system has even made its first payout) that too many people have believed their promises, and are actually signing up for the gross FIT, it's going to cost the Govt too much money so they changed the system to a NET tariff, paying only for power sold.

This tariff is now nominated at 40 cents per unit.

Meantime (this is like an episode of "The Untouchables" - "Ness and his men are heading to the secret hideout ..") the Govt has bitten bullet and decided to rise the price charged for power to a more realistic level, so that a kWh at peak is 40 cents. This means that when taken together with the Govt subsidy of 40 cents that if I sell a kWh at peak I will received 80 cents!!!

So then Synergy (as opposed to the Govt) says "we've checked the real value of the electricity and have decided that we will only pay 7 cents per kWh (regardless of time of generation), but still CHARGE our consumers the same price ... ie 40 cents."

Synergy can then buy the kWh at 7 cents (which means that the householder received 7 cents plus the 40 cent Govt FIT) then immediately resell the unit at 40 cents!!!

So the Govt has succeeded in making Synergy bad guys (trying to create the impression that Synergy isn't a Govt instrumentality) while playing the Shiney White Knights at the next election.

The joker in the pack is the FIT has (and always did have) a limited life of 10 years, and there's no guarantee that it will stay in place because it's simply a Govt grant of taxpayers money, which can be withdrawn if the political weather changes.

So at the end Synergy is buying at 7 cents and selling at 40 cents, for absolutely no cost. (But this money nevertheless finds its way into the Govt coffers.)

***************

Hope that clarifies it, Rob.

Now, the reason why I came back to this thread, yesterday I received the second of three cash payments from the State Govt which are to total $1600. (Also an election promise - but kept (so far).) Still another $950 to go. That will be Oct-Dec 2011.

So I've come a step closer to paying off the PV system. :smile1:

Still on the good side, my last power bill was $23 in credit, and so far it looks like my next one will be of similar magnitude or greater.

We've just had our hottest and driest spring on record (less than 50% annual rainfall to date), and it's been hot, hot, hot. (Had 41 degrees Centigrade a couple of days ago). But I'm still getting free house cooling (24 degrees C inside) because the PV is generating more power than my "wheel around" air cooler (refrigerated) consumes. So despite the appalling conditions I'm reasonably comfortable. HOwever, the eastern states are suffering such rain and flooding that in some places 80% of the food crops have been unharvestable!!


Climate change? Hah!! A mere figment of a sick imagination.

Joe:sad2: