Australian news, and some related international items

Fossil fuel generators manipulating Australia’s energy prices

Regulators’ wake up call: Fossil fuel majors are gaming markets, REneweconomy, By Giles Parkinson on 1 June 2017  Australian regulators are finally waking up to the grim consequences of Australia’s archaic energy market design, and the fallout from the reckless and self-serving opposition to carbon pricing and renewable energy targets by the industry incumbents.

The Australian Energy Regulator’s latest State of the Energy Market report paints a frightening picture of how prices are controlled, manipulated and thrust into orbit by the cynical bidding practices of the major fossil fuel generators.

Consumers – both households and business – are paying the price, and they are faced with a double whammy, because as the Queensland Competition Regulator notes in its latest pricing report, it is the lack of renewable energy in the state which is allowing the coal and gas generators to set high prices.

This last bit of information is highly ironic, because the QCA, under the then leadership of Malcolm Roberts (not the Senator, but the current head of the main oil and gas lobby APPEA) was among those who used to rail against solar feed in tariffs and the like.

The then Queensland energy minister Mark McArdle argued that renewable energy would cause energy prices to surge. In fact, as anyone who was paying attention would have predicted, the opposite has turned out to be true……..

The market power of major fossil fuel generators and their bidding practices have been highlighted in the AER’s State of the Energy Market report released this week, and is yet more confirmation about the poor design of market rules which leaves the regulator powerless to act.

The report acknowledges that the problem stems largely from the decision to allow generators and retailers to form so-called “gentailers”.

This has helped those big companies protect their own revenues through hedging, but also create an oligopoly that the AER says has posed a “potential barrier to entry” to new generators and retailers.

AGL Energy, Origin Energy and EnergyAustralia, it notes, supply 70 per cent of retail electricity customers in the NEM and have expanded their market share in generation capacity from 15 per cent in 2009 to 48 per cent in 2017. In some states, control of generation lies in the hands of just two or three major players.

This market dominance has reached such levels that it is the bidding practices of the generators – rather than the ratio of renewables or even soaring gas prices – that is having the major impact on prices that consumers pay…….

June 2, 2017 - Posted by | AUSTRALIA - NATIONAL, energy

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