Friday, March 9, 2012

Is a "formula" the same as a licence to print money?

Here are a few graphs, showing the way the standard domestic/commercial formulae used by TLC have changed over the last few years. Oddly enough TLC seems to find that every year, without fail, those at the very bottom of the power consumption ladder just keep generating more and more load in peak times, and so must pay more. At about 6 kWh per day or 550 kW over 92 days of uncontrolled consumption (so typically not including water heating) the formula now spits out a 10% higher kW load estimate than it did last year. Add in the notified "price increases" and your bill will be increasing by quite a bit more than that even though your consumption (and most likely true kW load) has not changed.

Or is it all just a way to beat these customers up until they switch to using a time of use (demand) meter?

First, a close up of the lower end of the range, roughly corresponding to those customers who may be eligible for the low user plan. TLC has (roughly, somehow) determined that an "average" kW load value for domestic homes is 2.2 kW although you'd think this needs to be adjusted upwards with the every increasing load estimates.

This version shows a large range of the input values, roughly corresponding to what you might expect from most domestic dwellings. Note that TLC's formulae often turn into straight lines once you get above a certain level of consumption.
This is a very "wide angle" view of the same formulae again. The 2009 formula predicted much kW load figures than those from later years at very high levels of consumption. All these formulae are derived from a small sample of domestic homes (and all from the northern area) so it's quite possible the estimates at the very high levels (which would also typically come from commercial and industrial users of one kind of another) to be even more inaccurate. Note also that up to 2012, accommodation and holiday homes were subject to these formulae also but in 2012 TLC introduce a new formula just for that group.
This shows the very large and painful change TLC have imposed (at rather short notice I might add) on accommodation and holiday home customers (top line) as compared to the formula applied to them (and others) last year (lower, red line).

What is missing from all of this is a complete, detailed, correct description from TLC on how the formula are derived, how (in)accurate they may be, what data was used as the basis for them and so on. The graphs below comes from an earlier version TLC's 2010 methodology but you won't be able to find it on their site any more...

This "shows" how the non-dairy formula TLC used over 2010/2011 was derived.  The red data points are 92 day consumption figures versus peak demand (apparently the single highest 3 hour period "while load controlling" - although this was not data that I processed) based on the smallish sample of homes ALL drawn only from the northern region. Count the dots - I get about 110 which is a miserably low sample size to set the rates for the other (roughly) 20,000 customers. Anyway, the black line is "the formula", derived by finding some kind of "best fit" to the red data points and then expressing that mathematically.

In other words, the line in this final graph shows where the formula behind the blue line in the first three graphs above came from. I wonder what they've used to come up with the 2012 formulae? Looking at the very top graph you'll see they top line is remarkably similar in general shape to the next one down (for 2011) so I think we rest assured the same old tired sample from up north is still influencing everything.

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