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.

The 2012 Formulae - direct from The Lines Company

Copied and pasted from an email from TLC, below you can find the new 2012 formulae. TLC haven't published this info on their site as of now but no doubt will at some point - please use their information if there is a difference.

A key detail to remember is that the input "consumption" value needs to be the total uncontrolled units (kWh) used over a 92 day period, or at least an estimate of that based on readings taken from some appropriate period from 2011 (June through September for all but dairy farms which instead are analysed using the September through December period).

For a completely uncontrolled installation or meter that has no controllable load attached, use all of the recorded consumption. For "mixed meters" it seems TLC are still using 65% of the total units in the "southern areas" and 75% for Te Kuiti north. For the "Limited Off Peak meters" 55% of the actual consumption recorded is used. Night time consumption is also disregarded if metered separately.

All of these factors and adjustments as above can compound the inherent inaccuracies in the formulae as these percentages are just some kind of estimate that TLC has never properly explained or supported with detailed data.

These formulae clearly also come direct from a spreadsheet (e.g. Excel) so interpret them in that context (* is multiplication, / is division, ^ is exponentiation, IF is the "IF function", etc.)

Standard

    IF(consumption<750,(0.1391*consumption^0.4931)/2*1.0161,((0.001559*consumption)+2.476)/2*1.0161)


Accommodation

    (0.04354*consumption^0.7329/2)*1.0423


Dairy

    (0.0009*consumption+3.9795)*1.0097

Those on the red line, see red!

TLC have created a whole new storm after sending out their most recent pricing letters about a week ago. One particularly significant change is that the new 2012 formulae (now masquerading as "profiles") include a new entry to be applied to accommodation businesses (e.g. motels) and holiday homes. In summary, TLC customers lumped (how exactly?) into this category can expect to have new charges based on a kW load figure that will often be about twice as high as that used a year ago even when their average winter daily consumption is essentially  unchanged. Here's the graph, red is the new profile.

Data for the graph was sourced from TLC's updated online calculators which I found earlier today. On the same pages TLC says that a minimum kW load of 2.5 will apply to those in Ohakune, and 2.2 elsewhere. This will roughly correspond to the point where the red line starts at the bottom left but for now I haven't shown that "little detail". What it means though is that the low usage holiday home owners still have to pay charges every month of the coming year based on a "kW load" of (at least) 2.2 kW - even if they actually used zero power for the whole winter!