Australia stares down an Electricity "Death Spiral"

This fantastic analysis explains the process which, it seems starts in Australia, unfortunately this is well known in Spain.

When the Electricity demand gets down, is not happening the same with the price of Electricity. In a normal business we have competence (retail business etc), some companies must faith for getting the customer, and of course get "the Customer Loyalty" giving a high quality support.

But what happens with Transmission and Distribution Electric Network Companies, the situation is very different, the real situation is: in the meanwhile the demand is falling down the customer are paying more and more for the Electricity Bill. 

In the article expose the case in Australia but in Spain was the same. 

In Spain, the consequence is nearly to the cost of 30.000 M€ (a little bit more of 26.000) at the end of this year. And only not increasing for the finish of Feed in Tarif to the PV industry during this year. We will see next year 2014.

During the Real State boom until 2008, the investment by REE (Spanish Operator) in Transport infrastructure and by the Utilities in AC Power Infrastructure for distribution systems was great. Nowadays, the demand has decrease strongly and as a result, the end customer, State, Renewable Energies (reduction of Feed in Tarif) and Utilities (Goverment law) must pay these great bill. 

Mr. Wood propose three reforms:

To reduce electricity costs, the AER (Australia Energy Regulator) needs to set rates of return for network businesses that are consistent with the low risks of a natural monopoly. It should also implement more regular capital forecast reviews to ensure the businesses are spending an appropriate amount on infrastructure.

The second reform would be to move towards network tariffs that reflect the costs that consumers place on the network. Since it is peak demand, rather than consumption, that is the major driver of those costs, a move towards peak demand tariffs would be sensible.

The third, and most difficult, action would be to explicitly review the value of the network infrastructure already installed and paid for by consumers. Falling demand means that network users no longer need all the infrastructure and would not want to keep paying for it.

Complete article: australia-stares-down-electricity-death-spiral?