4 ms·

> Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total)... Except that the price of water varies based on the season and you are oblig

by slv77 5y ago

> Let's say I buy 10 bottles of water wholesale for a dollar a piece ($10 total)... Except that the price of water varies based on the season and you are obligated to sell water at a fixed price when it is convenient for the buyer and buy water back at the same time when it is also convenient for the buyer (duck curve). Over the course of a season the buyer has stated that his intention is to buy as much as he sells and be net-zero every season but refuses to store even a single bottle of water (e.g. batteries). The buyer would be very upset if water always be available at any time of the day or night in reasonable quantities. The buyer doesn't want to pay any costs for bottling (peaker plants, hydro), storage (batteries, pumped hydro) or water distribution (grid). The buyer has a habit of buying water when there is a drought and it is expensive and sell it back to you when there is a flood and water is cheap. The buyer doesn't want to change his lifestyle so that his water usage was more in-line with with the seasons (e.g. smart thermostats, lifestyle changes). The buyer has zero incentive to reduce his overall usage below current levels. You are expected to sell water on credit and track and collect from buyers every month (billing) but the buyer doesn't believe that he should have to pay for that for that because you have to do it anyway. Sometimes you don't get paid but the buyer wants to be guaranteed he will be paid even when you don't get paid (credit risk). Your suppliers are being mandated to reduce the amount of waters being pulled from aquifers (fossil fuels) and are saying that the cost of water during droughts will likely rise over the next 20 years. In addition we'll likely see more floods and expect that prices of water during a flood may go negative so you expect based on his habits that your buyer will lose you more money then in the past. The trucks you use to move water around are old and have caused accidents due to poor maintenance (fires) and need to be replaced with more expensive models (buried cable). Nobody wants you to build warehouses since the 50's (hydro) because they are ugly and all good land for warehouse has been used but you are running out of warehouse space. This is leading to scenarios where entire communities haven't been able to get water and people have died. The relationship with this buyer is massively one-sided and a money losing proposition. You have been sued because of the accidents and have gone into bankruptcy. Your buyer is a middle-class home owner and when you talk to him about the challenges he doesn't want the relationship to change and he expects that he won't pay more over the next 20 years. Costs for other buyers have roughly doubled in the last 10 years and are on average poorer then your homeowner.

jjk166 5y ago
> Except that the price of water varies based on the season and you are obligated to sell water at a fixed price when it is convenient for the buyer and buy water back at the same time when it is also convenient for the buyer (duck curve). Everything happens instantaneously. The same moment the buyer returns 5 water bottles, they are purchased by another. The credit that one receives receives is for exactly the amount the other buyer pays, and they cancel out. It is as if the sale was always to the second buyer to begin with. > Over the course of a season the buyer has stated that his intention is to buy as much as he sells and be net-zero every season but refuses to store even a single bottle of water (e.g. batteries). The buyer would be very upset if water always be available at any time of the day or night in reasonable quantities. The buyer doesn't want to pay any costs for bottling (peaker plants, hydro), storage (batteries, pumped hydro) or water distribution (grid). There is nothing to bottle, the water is still in the same bottle it was purchased in. There is nothing to store, the water is produced and consumed instantaneously. The distribution is paid for by the second buyer who purchases it. > The buyer has a habit of buying water when there is a drought and it is expensive and sell it back to you when there is a flood and water is cheap. The buyer doesn't want to change his lifestyle so that his water usage was more in-line with with the seasons (e.g. smart thermostats, lifestyle changes). The buyer has zero incentive to reduce his overall usage below current levels. When the buyer's well dries up they go into town to purchase water from someone else. They are paying the same price as everyone else purchasing water during the drought. > You are expected to sell water on credit and track and collect from buyers every month (billing) but the buyer doesn't believe that he should have to pay for that for that because you have to do it anyway. Sometimes you don't get paid but the buyer wants to be guaranteed he will be paid even when you don't get paid (credit risk). The buyer does sell their water on credit, but to only one customer: you. They accept the credit risk that they may not be paid, but the odds of the water salesman defaulting are much lower than a random water buyer. Should you go under, the credits you gave them to their account become worthless. > Your suppliers are being mandated to reduce the amount of waters being pulled from aquifers (fossil fuels) and are saying that the cost of water during droughts will likely rise over the next 20 years. In addition we'll likely see more floods and expect that prices of water during a flood may go negative so you expect based on his habits that your buyer will lose you more money then in the past. Your buyer provides you with a source of water that doesn't come from the aquifers, and you're the one who hasn't invested in any way to store water from the flood > The trucks you use to move water around are old and have caused accidents due to poor maintenance (fires) and need to be replaced with more expensive models (buried cable). Nobody wants you to build warehouses since the 50's (hydro) because they are ugly and all good land for warehouse has been used but you are running out of warehouse space. This is leading to scenarios where entire communities haven't been able to get water and people have died. Luckily since there are more sources of water and they are closer to the buyers, the water trucks don't have to be driven as far, and don't need to carry as much water. > The relationship with this buyer is massively one-sided and a money losing proposition. You have been sued because of the accidents and have gone into bankruptcy. Your buyer is a middle-class home owner and when you talk to him about the challenges he doesn't want the relationship to change and he expects that he won't pay more over the next 20 years. Costs for other buyers have roughly doubled in the last 10 years and are on average poorer then your homeowner. The relationship with the buyer is indeed massively one sided. You determine the water prices, they can only sell to you, the can only sell water in exchange for the possibility of purchasing water in the future, you can afford as many lawyers as you like, the king has decreed that you are entitled to a guaranteed profit on your water, and no matter what you do the people need a water supply so you will not be allowed to fail. If the water buyer with his little well has to pay the same rising prices as everyone else for the water he purchases, and if he doesn't like it he can die in the desert.

by slv77 5y ago

jjk166 5y ago

> Except that the price of water varies based on the season and you are obligated to sell water at a fixed price when it is convenient for the buyer and buy water back at the same time when it is also convenient for the buyer (duck curve). Everything happens instantaneously. The same moment the buyer returns 5 water bottles, they are purchased by another. The credit that one receives receives is for exactly the amount the other buyer pays, and they cancel out. It is as if the sale was always to the second buyer to begin with. > Over the course of a season the buyer has stated that his intention is to buy as much as he sells and be net-zero every season but refuses to store even a single bottle of water (e.g. batteries). The buyer would be very upset if water always be available at any time of the day or night in reasonable quantities. The buyer doesn't want to pay any costs for bottling (peaker plants, hydro), storage (batteries, pumped hydro) or water distribution (grid). There is nothing to bottle, the water is still in the same bottle it was purchased in. There is nothing to store, the water is produced and consumed instantaneously. The distribution is paid for by the second buyer who purchases it. > The buyer has a habit of buying water when there is a drought and it is expensive and sell it back to you when there is a flood and water is cheap. The buyer doesn't want to change his lifestyle so that his water usage was more in-line with with the seasons (e.g. smart thermostats, lifestyle changes). The buyer has zero incentive to reduce his overall usage below current levels. When the buyer's well dries up they go into town to purchase water from someone else. They are paying the same price as everyone else purchasing water during the drought. > You are expected to sell water on credit and track and collect from buyers every month (billing) but the buyer doesn't believe that he should have to pay for that for that because you have to do it anyway. Sometimes you don't get paid but the buyer wants to be guaranteed he will be paid even when you don't get paid (credit risk). The buyer does sell their water on credit, but to only one customer: you. They accept the credit risk that they may not be paid, but the odds of the water salesman defaulting are much lower than a random water buyer. Should you go under, the credits you gave them to their account become worthless. > Your suppliers are being mandated to reduce the amount of waters being pulled from aquifers (fossil fuels) and are saying that the cost of water during droughts will likely rise over the next 20 years. In addition we'll likely see more floods and expect that prices of water during a flood may go negative so you expect based on his habits that your buyer will lose you more money then in the past. Your buyer provides you with a source of water that doesn't come from the aquifers, and you're the one who hasn't invested in any way to store water from the flood > The trucks you use to move water around are old and have caused accidents due to poor maintenance (fires) and need to be replaced with more expensive models (buried cable). Nobody wants you to build warehouses since the 50's (hydro) because they are ugly and all good land for warehouse has been used but you are running out of warehouse space. This is leading to scenarios where entire communities haven't been able to get water and people have died. Luckily since there are more sources of water and they are closer to the buyers, the water trucks don't have to be driven as far, and don't need to carry as much water. > The relationship with this buyer is massively one-sided and a money losing proposition. You have been sued because of the accidents and have gone into bankruptcy. Your buyer is a middle-class home owner and when you talk to him about the challenges he doesn't want the relationship to change and he expects that he won't pay more over the next 20 years. Costs for other buyers have roughly doubled in the last 10 years and are on average poorer then your homeowner. The relationship with the buyer is indeed massively one sided. You determine the water prices, they can only sell to you, the can only sell water in exchange for the possibility of purchasing water in the future, you can afford as many lawyers as you like, the king has decreed that you are entitled to a guaranteed profit on your water, and no matter what you do the people need a water supply so you will not be allowed to fail. If the water buyer with his little well has to pay the same rising prices as everyone else for the water he purchases, and if he doesn't like it he can die in the desert.