Craig,

The plant I work at pays about $1.3m per month and consumes 25 MW 24/7, imports power at 33kV and , and is not subsidized one iota. The large smelters which load manage get contract prices as low as 2c/kWhr to balance the load.

The smaller the amount of power you use, the greater the portion the distribution cost is. The present average generation cost is less than 5c/kWhr and domestic consumers pay 90% as distribution costs.

So if you increase electricity costs to 20c/kWhr you would happily add $2.5m /month or $30m p.a. to our operating costs. Aus already has one of the highest power costs in the world. Compare that to South africa where the cost for large business is less than 1c /kWhr and you should get some idea of the competition.

Of course it's subsidised - any discount to encourage higher levels of consumption is a subsidy.

https://en.wikipedia.org/wiki/Subsidy

The fact that your industry has a sunk cost in its investment in whatever technology it currently uses does not entitle it to expect the rest of us to pay for it to make higher profits. If the firm cannot make a profit at realistic prices for its inputs, it must look to change its business model or close. This is the reality of a competitive market.

Your argument about distribution is sound, but limited by its application to a rapidly obsolescing centralised generation model. A broadly decentralised model in which generation occurs as close to use as possible is inherently more efficient and reduces costs of distribution. The only reason for centralised generation is that at the time the current power models were put in place the only useful form of power generation was coal and the most efficient way to produce power from coal is to put the generators next to the mines.

As the paper I sent to you clearly demonstrates, that is no longer the case.

This report from the US EIA is instructive as to the future

http://www.eia.gov/conference/2013/pdf/presentations/namovicz.pdf

It's especially useful because unlike the simplistic self-serving analyses that hucksters try to pass off, it includes opportunity costs and projected future changes in both demand and generation technology.

Craig what twaddle,

From your link "A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy."

A bulk discount is a reflection of the lower costs of delivering power to big consumers on the typical user pays basis. The generators and distributors are still making a profit, and the company is busy lining the taxpayers pockets not the other way around. Unless you consider Kelloggs is subsidizing your purchase of a jumbo carton of cornflakes.

Secondly distribution is not an ideology, it is always a least cost model, and whilst minimizing distribution distance is a priority, so is the source of the generating power, the land etc, and transporting power via wires is generally cheaper than transporting coal, biofuel etc. Building Concentrated solar plant are better built in low rainfall areas, wind turbines in high wind areas etc, so the science behind the distribution has not changed one iota.

Yes, SM, and the "economic and social policy" that is being encouraged is the maintenance of a higher baseload.

There are no "lower costs of delivering power to big consumers", the unit costs are exactly the same, unless the consumer of the power is directly adjacent to the generator. In some cases, especially where the big consumer has large reactive loads, the unit cost of supply may be considerably higher than for consumer delivery. The generation provider provides power more cheaply to users who can guarantee to spread their consumption across the full diurnal cycle because it at least gets some revenue from the power it has to produce anyway and the alternative is to waste it to load banks. Transitioning to a renewables based model does away with that and, of course, to the subsidies that some businesses have come to think are theirs to demand as of right.

I'm not sure what you think ideology has to do with anything, this is a technical discussion, or at least, on my side it is, I'm not sure what you think you're talking about. You seem to be in furious agreement with me as to the way the distribution model works, so I guess that's something to be thankful for.

Craig,

What unmitigated bollocks. I have worked in several large industrial plants all of them a long way from the generation, not one of which was subsidised and all had similar rates.

The 2x 33kV lines (which we paid for) has nearly zero maintenance, compared to the roughly 100 000 homes that would require a vast network of HV and LV lines. The costs of supply are tiny fraction, and yes the 24hr demand does mean cheaper prices.

However the net result is that tripling our energy cost for large industries would wipe them out.

Jabber, jabber, jabber...