SA Economy

[rev]

If I need to buy 100,000 cans of tomatoes, I can either go to the shop and pay the retail price that people who buy 1 or 2 cans pay. Or I can go to the people who make cans of tomatoes and try to negotiate a better price.

Seems reasonable to me

This is a situation created by governments. It is not reasonable to then throw it back at consumers be they households or businesses and say go sort it out.
Households don't have the capacity to sort it out them selves, and businesses having to do it, well those costs get passed on to consumers, the same consumers who are strapped for cash already.
It makes an already miserable economic situation even worse.

Consumers cut back on spending because things become more expensive.
Businesses cut back staff because their turn over drops.
Producers start cutting back staff because their turn over drops.
Producers then start to go under.

[Waewick]

If I need to buy 100,000 cans of tomatoes, I can either go to the shop and pay the retail price that people who buy 1 or 2 cans pay. Or I can go to the people who make cans of tomatoes and try to negotiate a better price.

Seems reasonable to me

This is a situation created by governments. It is not reasonable to then throw it back at consumers be they households or businesses and say go sort it out.
Households don't have the capacity to sort it out them selves, and businesses having to do it, well those costs get passed on to consumers, the same consumers who are strapped for cash already.
It makes an already miserable economic situation even worse.

Consumers cut back on spending because things become more expensive.
Businesses cut back staff because their turn over drops.
Producers start cutting back staff because their turn over drops.
Producers then start to go under.

Well yes, the failure of the Federal LNP to transition the country away from fossil fuels as an energy generation source is well documented, so is the lack of a coherent energy policy for the 9 years they were in power.

But the there is no solution outside investing back into the system, which needs to be paid for by someone.

[rubberman]

If I need to buy 100,000 cans of tomatoes, I can either go to the shop and pay the retail price that people who buy 1 or 2 cans pay. Or I can go to the people who make cans of tomatoes and try to negotiate a better price.

Seems reasonable to me

This is a situation created by governments. It is not reasonable to then throw it back at consumers be they households or businesses and say go sort it out.
Households don't have the capacity to sort it out them selves, and businesses having to do it, well those costs get passed on to consumers, the same consumers who are strapped for cash already.
It makes an already miserable economic situation even worse.

Consumers cut back on spending because things become more expensive.
Businesses cut back staff because their turn over drops.
Producers start cutting back staff because their turn over drops.
Producers then start to go under.

Well yes, the failure of the Federal LNP to transition the country away from fossil fuels as an energy generation source is well documented, so is the lack of a coherent energy policy for the 9 years they were in power.

But the there is no solution outside investing back into the system, which needs to be paid for by someone.

Exactly. The power sector in SA was divested from government ownership. Sold. We got money from the sale.

If governments sell assets, they are no longer in control of those assets. The SA Government no longer owns any generating capacity, nor retailing of electricity.

It is extremely frustrating when dealing with people who don't seem to understand that when the government sold ETSA, it literally did throw it all on consumers to deal with the private sector. Further, there was no guarantee given by those private companies to keep the lights on. So, some of them just ran the assets into the ground and abandoned them. That's what happened to Leigh Creek and the Port Augusta power stations. When they closed down, nobody had planned any replacements, and with that sudden drop in supply, prices went up.

Yet to hear the usual suspects, you'd think that prices went up because of renewables, and that the loss of Port Augusta power had no effect. Or that privatisation had nothing to do with any of it.

Sometimes it's just better to shake one's head and move along.

[rev]

Apparently the sale of ETSA is somehow related to the economic situation, cost of living crisis etc.

Can a mod clean up the thread before the usual 2-3 who argue about their electricity politics do it to another thread.

[abc]

I'm not sure how population statistics are difficult to come by in Australia... The Bureau of Statistics has a population clock, which includes data from the past and estimates into the future. You can even go state by state.

https://www.abs.gov.au/statistics/peopl ... ck-pyramid

The current estimated population of SA is 1,886,661.

its just a simulator, its not the actual population statistic

[Jaymz]

Well generally, competition within the private sector usually results in cheaper prices. That is how it's supposed to work.

There are literally dozens of retailers within the electricity market available to consumers, but it hasn't resulted in cheaper prices. That can only mean it's the cost of generation dictating the price.

[SouthAussie94]

If I need to buy 100,000 cans of tomatoes, I can either go to the shop and pay the retail price that people who buy 1 or 2 cans pay. Or I can go to the people who make cans of tomatoes and try to negotiate a better price.

Seems reasonable to me

This is a situation created by governments. It is not reasonable to then throw it back at consumers be they households or businesses and say go sort it out.
Households don't have the capacity to sort it out them selves, and businesses having to do it, well those costs get passed on to consumers, the same consumers who are strapped for cash already.
It makes an already miserable economic situation even worse.

Consumers cut back on spending because things become more expensive.
Businesses cut back staff because their turn over drops.
Producers start cutting back staff because their turn over drops.
Producers then start to go under.

The article you linked to and emphasised was about Nippy's and their electricity usage.

Nippy's, as a company, would have supply agreements in place with all sorts of suppliers for a multitude of things. I guarantee that the price they pay for 1kg of oranges is much cheaper than anything you or I could ever get. ie: they've negotiated a price with a supplier of oranges.

What Stephen Mulligan is suggesting in the article is that Nippys negotiate an energy supply agreement directly with either an energy retailer or energy supplier, exactly as they would have done with their orange supplier. This has the potential to give them a price than is lower than would otherwise be available.

Nippy's would use 100,000(??) oranges a year, this would give them an advantage when negotiating with an orange supplier. If you or I went to the same orange supplier and tried to buy 4 oranges for the same price we'd likely be laughed out the door.

If Nippy's are using 100,000 units of electricity, they would have much more bargaining power with a retailer/supplier to negotiate a price than you or I would have if we're using 4 units of electricity.

BHP have done this with Neoen. They've signed a contract directly with the electricity generator which I presume would give them electricity at a lower price than they would otherwise get if they were buying it from a retailer.

Buy in bulk and save. Buy direct from a supplier rather than a retailer and save even more. It's pretty simple stuff.

[rubberman]

Well generally, competition within the private sector usually results in cheaper prices. That is how it's supposed to work.

There are literally dozens of retailers within the electricity market available to consumers, but it hasn't resulted in cheaper prices. That can only mean it's the cost of generation dictating the price.

Or the cost of transmission.

Or, indeed the cost of generation. Which may be coal, gas, or renewables. Now, as a matter of fact, gas prices are pretty high.

Here's a discussion paper. https://blog.energy-insights.com.au/gas ... n-continue

[Jaymz]

BHP have done this with Neoen. They've signed a contract directly with the electricity generator which I presume would give them electricity at a lower price than they would otherwise get if they were buying it from a retailer.

It's a bit of a stretch to compare the situation of Nippy's and BHP. One is the largest mining company in the world, the other is a medium sized company with turnover (i'm guessing) in the tens of millions of dollars.

[rubberman]

Well generally, competition within the private sector usually results in cheaper prices. That is how it's supposed to work.

There are literally dozens of retailers within the electricity market available to consumers, but it hasn't resulted in cheaper prices. That can only mean it's the cost of generation dictating the price.

Or the cost of transmission.

Or, indeed the cost of generation. Which may be coal, gas, or renewables. Now, as a matter of fact, gas prices are pretty high.

Here's a discussion paper. https://blog.energy-insights.com.au/gas ... n-continue

[rubberman]

BHP have done this with Neoen. They've signed a contract directly with the electricity generator which I presume would give them electricity at a lower price than they would otherwise get if they were buying it from a retailer.

It's a bit of a stretch to compare the situation of Nippy's and BHP. One is the largest mining company in the world, the other is a medium sized company with turnover (i'm guessing) in the tens of millions of dollars.

A bill of $100,000/month for Nippy's is still enough to give them negotiating power vs the average domestic consumer paying $450/month. It's not a stretch to say that Nippy's could negotiate a far better deal than you or I.

[SouthAussie94]

BHP have done this with Neoen. They've signed a contract directly with the electricity generator which I presume would give them electricity at a lower price than they would otherwise get if they were buying it from a retailer.

It's a bit of a stretch to compare the situation of Nippy's and BHP. One is the largest mining company in the world, the other is a medium sized company with turnover (i'm guessing) in the tens of millions of dollars.

A bill of $100,000/month for Nippy's is still enough to give them negotiating power vs the average domestic consumer paying $450/month. It's not a stretch to say that Nippy's could negotiate a far better deal than you or I.

Exactly.

It wouldn't be a stretch to assume that Nippys would be in the top few percent of electricity users in the state. Their usage would obviously be significantly less than BHPs so their buying power and negotiating position wouldn't be as strong, but their usage would be significantly more than the average households.

[Waewick]

I have a number of friends who run their own businesses, SME.

Most of them negotiate directly rather than get 'retail' , well negotiate probably isn't the right word, but they do get it cheaper.

A few host their own solar farms as well.

As a country we unfortunately are in the middle of a transition/upgrade.

[Norman]

I'm not sure how population statistics are difficult to come by in Australia... The Bureau of Statistics has a population clock, which includes data from the past and estimates into the future. You can even go state by state.

https://www.abs.gov.au/statistics/peopl ... ck-pyramid

The current estimated population of SA is 1,886,661.

its just a simulator, its not the actual population statistic

The numbers shown for previous years is actual data, and future years are projected.

The actual population is covered under the National, state and territory population product.

https://www.abs.gov.au/statistics/peopl ... st-release

The population of SA in December 2023 was 1,866,300.

[SBD]

It's a bit of a stretch to compare the situation of Nippy's and BHP. One is the largest mining company in the world, the other is a medium sized company with turnover (i'm guessing) in the tens of millions of dollars.

A bill of $100,000/month for Nippy's is still enough to give them negotiating power vs the average domestic consumer paying $450/month. It's not a stretch to say that Nippy's could negotiate a far better deal than you or I.

Exactly.

It wouldn't be a stretch to assume that Nippys would be in the top few percent of electricity users in the state. Their usage would obviously be significantly less than BHPs so their buying power and negotiating position wouldn't be as strong, but their usage would be significantly more than the average households.

I thought I heard the guy from Nippy's say that it had a well-negotiated three-year contract until it expired at the beginning of the year. Since then, it deliberately changed to a spot market contract, presumably hoping to benefit from the periods of negative pricing, but it didn't work. The interviewer did not pick up on this decision. Did I mishear it?