Antinuclear

South Australia’s electricity price spike manipulated by fossil fuel generators

Energy companies withholding supply to blame for July price spike, report finds
Analysis of temporary jump in prices in South Australia showed generation capacity far exceeded demand, pointing to market manipulation, Guardian, Michael Slezak, 17 Aug 16 Fossil fuel electricity generators in South Australia withheld their supply to push up prices and reap bigger profits, according to an analysis of the causes behind the extremely high prices there in early July.

The findings suggested some solutions proposed ahead of this week’s Coag energy council meeting for the so-called “energy crisis” like increasing the supply of gas in Australia won’t help the situation at all.

The three things often pointed to as possible causes of the price spikes, especially on 7 July, have been the closure of the Northern power station, the main Victoria-SA interconnector being down and wind farms not producing much power.

But in a report commissioned by GetUp, energy analyst Bruce Mountain showed the generation capacity that was available in the market still far exceeded the demand. However, besides those owned by Origin, all other fossil fuel generators continued to operate far below their capacity, only offering electricity to the market for a very high cost.

In addition, Mountain showed the Australian Energy Market Operator (Aemo) forecasted that low wind and the interconnector maintenance would create high prices, which the generators could have responded to by ramping up supply and making solid profits.

“Yet, they did not respond to that information by making more of their production available to the market,” Mountain said in the report.

“Had this capacity been made available to the market at more reasonable prices, even prices far above production cost, those extreme prices would not have occurred.”

Mountain said Snowy Hydro, Engie, AGL and Energy Australia were exploiting their market power to push up prices. He said they weren’t doing anything illegal, but they were taking advantage of a market that wasn’t functioning properly.

“I think there’s a question of social license –and we’re seeing this in many other industries, where people are expected not just by the letter of the law but by the spirit of the law and maybe there’s scope for some of that to find its way into how we think about these things,” said Mountain.

Miriam Lyons from GetUp said the market is failing to deliver the competition needed to protect consumers’ interests.

“This shows that the answer to South Australia’s problems is not more gas, but more competition. Supporting cleaner suppliers of on-demand energy – like concentrating solar thermal in Port Augusta – would be far better for consumers, and for the planet……..https://www.theguardian.com/australia-news/2016/aug/17/energy-companies-withholding-supply-to-blame-for-july-price-spike-report-finds

August 19, 2016 - Posted by Christina Macpherson | energy, South Australia