Engineeting Costs and Awduction Eco Elsevier Science Publishers B.V., Atmt

This series of articles has dealt, so far, wi;h materials prices and labour costs. These are the major elements in the total production costs of many of the manufacturing and process industries, but there are other ele- ments of considerable importance in some industries. One of these elements is fuel costs and a report on industrial energy prices by an Energy Task Force set up in London by the National Economic Development Office in- cluded a table showing fuel costs as a percent- age of operating costs for various industries as follows:

Iron and steel 20-25 Paper and board 11--18 Chemicals and allied industries 6 Bricks, pottery, glass and cement 18 Textiles 6

Within each of these industries the proportion of fuel costs to operating costs can va9 considerably from the average figures and the example is quoted of chlorine production

y costs can account for 60% of the total. Figures in the Statistics showed that industry used 78 and produced 14 This is equivalent to 5.6 per tonne, costing about E7 in t coal, $8 in the form the form of electricity. ratio of coal to eie~t~ici~

when the sellin price of cement was about 840 per tonne.

The prices of fuels in~uen~ed by many factors such as t ource of supply, ~u~~n~y exchange rates, e~ment~l controls either

r by imposition of duties the level and re

consumption, Electricity and ga normally operate on tariffs which set out con- ditions of supply and unit rates which are generally on a sliding scale, falling with in- t/ crease in offtake. For gas in most countries1 and for electricity in some, there may be two sets of rates, one for ‘firm’ supplies, i.e. It taken at such times as the user requires, and another for ‘in ’ supplies, which may be dis- contin en periods at the supplier’s optiez* !?ices for ‘firm’ supplies in most EEC countries are about 10% above tkose for ‘interruptible’ plies. One aspect of pricin which cannot dealt with is the effect o special contracts which la e users are often

0167-188X/84/$03.00 Q 1984 Elsevier Science Publisherr B.V.

250

be converted approximately by assuming: lent of 1 tonne heavy fuel 0

h = 43 gigajoules (GJI)

e effect of changes in load faster (1.B can be significant.

FABLE 1

and in load A sharply-

falling rate scale will result in prices for heavy igh load factors considerably below

a national average price. This is of particular importance in an international comparison of large users such as the iron and steel industry. Belgium A unified national tariff system is

now in effect. The average price is for up to 2.5 MW load at 60% LF, add 10% for

-. 1977 1978 1979 1980 1981 1982

Local Currency Equivalent U.S. Cents.

--

km H3 83 87 B.Fr. 1.69 5.80 113 135 54 56 70 he 4.0.5 7.23 127 138

France 67 76 83 Cent 21.0 5.01 120 134 CbfnallFR 91 95 95 Pf. 10.5 5.68 113 125 It& 55 60 76 L.- 610 6.96 12s 149 Zl’etherlands 75 76 84 cent 12.0 5.92 105 125 U.K. 67 73 81 2.7 6.34 116 128 Australia 65 70 76 :en* 2.82 3.27 125 140 Canada 73 81 90 Cent 1.93 1.65 109 123 Japan 6s 66 66 Yen 119.1 8.80 110 111 Norway 80 88 he 7.79 1.57 109 -

Sweden 70 80 90 are 16.8 3.95 106 113 U.S.A. 68 76 83 Cent 3.69 3.69 116 134

TABLE 2

Gas prices per oule aad indices

1977 1978 1979 1980 1981 1982

Local Currency Equivalent U.S. $

__-

72 80 B.Fr. 115 3.+5 138 171 54 62 D.Kr. 71 12.7 118 133

51 60 66 17.83 4.26 136 168 74 76 78 7.62 4.12 134 160 41 45 63 3700 4.22 137 156 65 63 75 FL 7.7 3.81 131 148 p. 53 66 78 f 2.00 4.68 122 132

9 6 2.59 3.00 120 15op. 7 0 11.78 158

3 6.36 123 62 2.79 172

61 6 2.65 2.65 119 150

TABLE 3

Heavy fuel oil prices per metric tonne and indices

1977 1978 1979 1980 1981 1982

Local Currency Equivalent U.S. $

Belgium 63 55 58 B.Fr. 5300 182 138 160 Denmark 43 41 51. D.Kr. 1280 229 140 156 France 50 51 64 F.Fr. 800 191 136 157 German FR 65 58 74 DM 350 194 139 131 LuJlY 49 49 65 L. 150,000 171 152 156 Netherlands 69 53 68 FL 380 188 143 135 U.K. 61 57 71 f. 93 218 120 126 Australia 34 41 62 A$ 154 179 124 148 Canada 60 70 82 C$ 119 102 132 142 Japan 50 41 50 Yen 51,100 235 100 107 Norway 50 52 64 N.Kr. 934 188 134 150 Sweden 48 46 80 S.Kr. 960 226 140 158 U.S.A. 51 49 72 US$ 175 175 125 111

40% LF and deduct 5% for 80% LF. For 10 MW load deduct 10%.

Denmark Supply is by various supply author- ities. Add 15% for Copenhagen area, deduct up to 15% for other areas. Denmark im- ports electricity from Germany, Norway and Sweden. Electricity, like other fuels, has been increasingly heavily taxed since the mid-seventies. Average price is for 2.5 MW load at 60% LF, add 5% for 40% LF. For 500 kW load add 5%.

France Electricite de France has responsibility for all generation, distribution and sale of electricity. Average price is for 2.5 MW load at 60% LF, add 15% for 40% LF and deduct 10% for 80% LF. Add 15% for 500 kW and deduct 10% for 10

German F.R. Prices are subject to federal state control, and range from - 10% to +20% of national average for 2.5 MW load

are fixed by CIP. Average price is for 2.5 MW at 60% LF, add

5% for 40% LF and deduct 5% for 80% LF. 4

251

For 500 kW add 5% and deduct 15% for 1 MW load.

4 Netherlands Prices are subject to approval of Ministry of Economic Affairs. Average price is for 2.5 MW load at 60% LF in Rot- terdam area. Add 5% in Noord-Holland, deduct 20% in Noord-Brabant. Add 10% for 40% LF, deduct 5% for 80% LF. For 500 kW add 5%, deduct 15% for 10 MW.

U.K. Prices are set by area boards, with re- gional variations of - 10% to +lO%. Aver- age price is for up to 2.5 MW at 60% LF. For 40% LF add lo%, for 80% LF deduct 5%.

Australia Each State has its own price fixing

authority and there is a wide range in tariffs. Based on 1 MW load, range is from

252

-25% in Alberta to +lOO% in P.ince Ed- ward Island, with Ontario abow!: the na- tional average, Quebec 5% below and B.C.

below. Industry averages, relative to he national average for industry are

approx~ately :

0.8 1.5

on-metallic mineral products 1.15 1s and chemical products 0.95

ge prices given are for excluding energy tax,

en produce po;Ner on . The price to the alu-

m and non-ferrous metal industries is try price. The top price, nufacturing industries”

(i.e. excluding the metals, chemicals, paper and oil industries) is about twice the all-in- dustry price.

Sweden The average prices given are for pur- chased energy, excluding enew taxes but many consumers produce power on their own account at lower prices.

U.S.A. A regional break-down of industrial power is given in Producer Prices and Price Indexes, and ranges from about 25% beiow ~atio~aI averages in the central States to 15% above in the Pacific States and 30% above i2 Mew England.

Gas

The prices and indices in Table 2 refer to

either have indig- s s~~~~es o

counties with a gas in ~!.dd~tion to

EEC Countries The average price in each country, except Denmark, applies to a consumption of about 10” GJ (or 9.5 X

1 s) per year, and regional dif- ferences at this offtake are small. At very small consumptions, around lo3 GJ, the national averages should be adjusted by lthe factors as follows:

Belgium 1.6 France 1.5 Germany 1.2, except Hamburg at 2.0

and Dusseldorf at 1.5 Italy 1.3, except Genoa at 1.1 Netherlands 1.15 U.K. 1.15

Australia Prices and indices apply to the State of Victoria for a consumption of 7.2 X lo3 GJ per year. Prices are slightly higher in South Australia, 60% higher in Western Australia and 100% higher in Queensland and N.S.W. There is little information on larger consumptions but there are indica- tions that prices for very large offtakes could be 50% of listed averages.

Canada For prices to various industries the all-industry average should be multiplied by factors as follows:

Primary metals 1.05 Metal fabr.icating 1.2 Non-metallic mineral production 1 .O Chemicals and chemical products 0.27

The last figure is unduly low and suggests that it may include gas for feedstock as well as for energy.

rices are estimated, based on landed

s and indices are based on ex- nd exclude any energy tax

ay be payabIe on domestic con-

gional differences are very large. In a national average of $3.16

253

per GJ, prices ranged from $1.24 in Alaska and $1.84 in Arkansas to $5.36 in Maine and $5.66 in Vermont.

eavy fuel oil

The price structure for oil outside the Communist block is baser’ on the U.S. dollar and this means that domestic products for oil products fluctuate with changes in currency exchange rates. As has been pointed out in previous articles there have been substantial changes in exchange rates and these are reflected in the indices in Table 3.

For heavy fuel oil, the price may depend very much on the oil’s sulphur content. Low sulphur oil invariably costs more than high sulphur oil but the extent of the difference depends within a country on the demands for the various grades, and will fluctuate from time to time. Belgium F.O. carries no duties or taxes. Denmark F.O. carries increasingly heavy tax

from mid-seventies. Add 10% for 1% S,

France F-0. carries a small duty. In 1980 add 25% for under 0.5% S, add 15% for 0.5- 1.0% S, and add 7.5% for l--2% S.

Germany 1980 price includes duty of DM 6 per tonne and applies to 2% S content. Add 12% for 1% S.

Italy F.O. carries a small tax of about LlOOO per tonne. Price applies to 3-4% S, add 10% for 1% S.

Netherlands 1980 price includes duty of Fl. 6 per tonne. Price applies to 2% S, add 7% for 1% S.

U.K. 1980 price includes duty of &8 per tonne. Price applies to 2.5% S, add 2% for 1% S.

Australia Prices apply to high sulphur oil. In 198 1 add 10% for low sulphuroil.

rices include duty. S add 3%, for over 1% S deduct 3%.

U.S.A. Prices apply to average sulphur con- tent. The prices of specific grades relative to the average were:

0.370s. 0.31-l.O%S. l.O%JS. 1977 1.09 1.02 0.43 1978 1.13 1 .oo 0.92 1979 1.14 1.04 0.88 1980 1.19 1.06 0.85 1981 1.21 1.04 0.88 1982 1.25 1.06 0.89

PRICE COMPARISON

Table 4 shows the relative prices for the three fuels with U.S.A. prices as 1.0 in each year. It points up several interesting features. For electricity the advantages of hydro-elec- tric schemes are reflected by the low prices in

Canada, Norway and Sweden. France has the ‘lowest prices in the EEC countries list thanks largely to its nuclear powered statio For gas, Canada’s relatively low position due to government control of prices. Fro the viewpoint of relative costs Canada cou afford to increase gas prices because it is one of the few net exporters of gas among the industrialised countries. The Netherlands and Norway are also in the same posetion, A;lstra- lia is self-sufficient and the remaining nine cfyJntries listed are all net importers of natu- ral gas. On fuel oil prices, Canada again stands out, due once more to government control of prices. ‘Within the EEC prices are fairly con- sistent bearing in mind the differences in (a) rates of duty levied, (b) the sulphur content of the oils and (c) availability of crude oil within each country’s control. On all three fuels Japan has the highest prices and this has forced them to energy Wing in or offset the price disadvantages. That they have been successful is shown by their prices for ~nsre$e and steel products rr lative to otter

es (See Eng. COrts

254

TABLE 4

Fuel prices relative to U.S.A.: 1 electricity, II gas, III heavy fuel oil

- 1977 1978 1979 1980 1981 1982 __~~~

Belgium I 1.56 1.57 1.67 1.57 1.22 1.03 I1 1.35 1.44 150 1.49 1.38 1.11

II1 1.04 1.07 0.89 1.04 0.92 0.9 7

Denmark I 1.47 1.48 1.79 1.96 1.72 1.37 I1 3.55 3.83 3.99 4.79 3.80 2.88

II1 1.04 1.12 1.00 1.31 1.18 1.24

France 1 1.14 1.27 1.37 1.36 1 .oo 0.8’ 11 1.14 1.30 1.33 1.61 1.45 1.15

III 0.91 1 .os 0.99 1.09 0.94 0.98

German F R I 1.64 1.77 1.78 1.54 1.25 1.10 II 1.49 1.58 1.52 1.55 1.47 1.28

III 1.09 1.18 1.13 1.11 a .03 0.98

Italy 1 1.52 1.53 1.77 1.89 1.57 1.37 11 1.04 1.07 1.75 1.59 1.42 1.09

III 0.94 1.01 0.90 0.98 0.93 0.90

Netherlands I 1.47 1.49 1.65 1.60 1.37 1.14

U.K.

Australia

Canada

Japan

Norway

Sweden

U.S.A.

II 1.27 1.21 1.36 1.44 1.32 1.08 III 1.04 1.07 1.04 1.07 1.02 1.00

1 1.25 1.34 1.54 1.72 1.48 1.22 II I.20 1.39 1.58 1.77 1.58 1.16

Ill 1.10 i.19 1.13 1.25 1 *OS 1.05

I 0.90 0.96 0.93 0.89 0.95 0.82 II 1.44 1.43 1.29 1.13 1.13 1.00

III 0.65 0.86 U.87 1.02 1.00 1.15

I 0.54 0.48 0.48 0.45 0.41 0.39 II 0x3 0.80 0.73 0.67 0.72 0.69

III 0.76 0.85 0.56 0.58 0.61 0.70

I 1.89 2.10 1.94 2.38 2.24 1.76 11 1.51 1.62 2.40 2.20 1.74

111 1.10 1.13 0.96 1.34 1.07 1.15

1 0.45 0.45 0.43 0.37 II 0.95 0.88 1.05 1.02 0.93

III 0.99 1.08 0.95 1.07 1.01 1.12

I 1.08 1.05 1.15 1.07 0.82 0.62 111 1.1g 1.13 1.13 1.29 1.22 1.25

I 1.00 11 l.Oi)

111 1.00

General

A us tralia

Belgium

Canada

Denmark France

German FR Italy Japan

Netherlands

Norway Sweden U.K.

U.S. A.

Electricity Prices 1 Energy Statistics Yeaz-book ‘tiurostat, Paris Gas Prices Energy aid Hydro marbons -.~- Entj N ionale i~ocarba~, Yearbook of Worh4 Energy S?at~ ? Australia Energy Statistics -- Dc;,t. ional Development and The Electricity Su!)ply Industry 4:: Australia - Electricity Supply Ass Australia Annuaire Statistique de 1’Ind;r~: ’ 1 du Gaz - Federation de l’lndustrie du Gaz Statistiquu Electricit - Administi&ion de 1’Enc Consump.ion of pt_lrchased fuel ‘or d electricity Electric Power in Janada Consumer Prices :nd Price lndexr .s Gas Utilities

I Statistics Canada, Ottawa

Industry Price Indexes Dansk Elforsyning - Danish Association of Electricity Supply Undertakings Bulletin Mensuel de Statistique - INSEE 4

Statistiques - Gaz de France Statistik der Energiewirtzchaft - V.I.K. Bollettino Mensile Istitulrr Centrale di Statistica Price Indices Annual - Bsnk of Japan The Daiwa Economic and Industrial Indicators Maandstatistiek van de Prijzen

f Centraal Bureau van de Statistiek de Nederlandse energiehuishouding ii

Elektrisitets - Statistikk -- Central Bureau of Statistics, Oslo Statistiska Meddelanden, Series E - 1‘ational Central Bureau of Statistics, Stackholm Digest of U.K. Energy Statistics - H. . Stationery Office, London Electricity Supply Statistics - tricity Council, London Gas Facts The American Gas Association, Arlingto

view - US. Dept. of Ener