Power companies overstate cost of smart meters

The ABC reports that utilities havent been helping public perception of smart meter programs by overcharging for their installation - Power companies overstate cost of smart meters.

The Australian Energy Regulator that says Victorias power companies have overstated the cost of rolling out smart meters by $500 million.

In a draft decision, the regulator says CitiPower, Jemena, Powercor, SP AusNet and United Energy Distribution have not made a good enough case for charging $1.24 billion for the three-year roll out.

Andrew Reeves, the chairman of the electricity and gas regulator, says the cost increase is not justified.
"On their numbers put in front of us, charges would typically go up from currently about $100 a year to about $160 a year," he told ABC Local Radio.

"Under our proposal the charges would still increase, but would only increase by about an additional $20 a year."

The regulator says the cost of the rollout should be $760 million.

Energy Minister Michael OBrien says the State Government was always concerned that costs were not properly scrutinised by the former Labor government.
"Well be making our own submissions to the regulator before they make a final decision.

{ Read More }

Graph of the Day The Cost of Production Of Oil

TreeHugger points to a TOD post looking at the cost of production for oil from various sources - Does Peak Oil Even Matter?. The summary - "Peak Oilers have always pointed out that we will never run out of oil, it will just get a lot more expensive. And when it does, it will crush the economy" - might well be the view of a lot of peak oilers, but is entirely wrong - it should be rephrased as "And when it does, we will become both more efficient in our use of oil and replace it with alternatives (aka. convert our transport systems to use electricity and source this from renewable energy sources)"

Whenever we speak of Peak Oil, the optimists point out that the technology for finding replacements will turn up as the prices rise; look at what has happened with the oil sands and with shale gas. But as this graph shows, each alternative just gets more expensive.

A fascinating article by David Murphy in The Oil Drum questions the logic that these expensive options prove that peak oil is not a problem. But Peak Oilers have always pointed out that we will never run out of oil, it will just get a lot more expensive. And when it does, it will crush the economy. Murphy writes:

Oil infiltrates almost every facet of an industrial economy, from personal disposable income, to manufacturing, to service sectors. Therefore higher oil prices restrain growth via declining discretionary consumption as individuals allocate more money towards gasoline and home heating, or as the cost of producing a good increases, etc. Chris Nelder described this situation succinctly, writing: "The true import of peak oil, therefore, may not be sustained high prices, but economic shrinkage. Demand will be destroyed long before oil gets to $200 a barrel.

{ Read More }

US Gas to Liquid Plant Planned By SASOL May Cost 10 Billion

The WSJ reports that South African coal to liquids company SASOL is looking to build a GTL (gas to liquids) plant in Louisiana, using the (at least currently) cheap supply of shale gas as feedstock - Gas-to-Liquid Site May Hit $10 Billion.

Sasol Ltd., a chemical company long known for squeezing motor fuel out of coal, is now turning its sights on the glut of natural gas in the U.S.

South Africa-based Sasol on Tuesday announced plans to build a plant in Louisiana, at a cost of up to $10 billion, that would convert natural gas into diesel fuel for trucks and other vehicles.

The companys board last week approved an 18-month feasibility study for the project, which would be constructed on land adjacent to Sasols existing chemical facility in Calcasieu Parish, La.

If given the final go-ahead, the plant would be the first in the U.S. to use "gas-to-liquids" technology. Once seen as futuristic, the technology has gained traction in recent years as discovery of gas supplies have outpaced that of oil.

"The initial numbers look positive," said Ernst Oberholster, Sasols managing director of new-business development, who stood alongside Louisiana Gov. Bobby Jindal at the companys Louisiana complex when the decision was announced.

What makes the U.S. an attractive location for such a project is the low level of natural-gas prices in the country. Benchmark futures have hovered between $3 and $6 per million British thermal units for two years, well below prices paid by consumers in Europe and Asia.

Sasol would buy the natural gas from suppliers using long-term contracts, convert the gas to liquid fuel and then sell that fuel to blenders, who wouldthen sell it for the open market.

The project is the latest to address what to do with a surplus of natural gas caused by the boom in drilling in shale-rock formations in places like Texas and Pennsylvania. Energy investor T. Boone Pickens and natural-gas producers such as Apache Corp. have promoted the use of natural gas as a road-transportation fuel, one that would be cleaner burning than oil-based alternatives. In addition, some companies have put forward plans to export gas out of the U.S. in cool-liquefied form.

Sasols idea is one of the most ambitious, because it would essentially put natural gas on par with higher-priced crude oil as a key raw material for transportation fuels. And diesel prices trickle down into the cost of consumer goodseverywhere because the fuel is mainly used in trucking. So far this year, retail diesel prices in the U.S. are up 16%, even as the economy grows more fragile.

Sasol officials estimate that a plant producing 96,000 barrels a day of diesel, and some jet fuel, would cost $10 billion to construct. They say they could opt for a smaller facility, however.

By converting natural gas into a liquid, the fuel could be used without retrofitting vehicles or creating new fueling infrastructure, an issue that would affect motorists using compressed natural gas as Apache and Mr. Pickens have advocated. The proposed site in Louisiana is close to Gulf Coast natural-gas fields and is crisscrossed by pipelines that could be easily linked to a new facility, Mr. Oberholster said.

{ Read More }