Tell me this isn’t a government operation.
Right at the time that Australia is facing an energy crisis, power generators are making it even worse by taking capacity out of the grid. Why would they do that? Because, under the rules set down by the government, they will get paid even more as “compensation”.
Australia’s energy providers may have been privatised, but they operate under government rules. Rules set down by successive governments, and including many of the same people now in parliament and indeed in government, and managed by a government regulator. The Australian Energy Market Operator was created by the Rudd/Gillard government. In 2012, Gillard rejected the recommendation of her own task force, to enact emergency reserves of gas for the domestic market. To be fair to Gillard, the dog’s breakfast she and Rudd created was only scrambled further by the Turnbull government.
Power generators have been accused of adding to the uncertainty and chaos of the electricity supply crisis by taking capacity out of the market to access increased compensation payments, with almost 4000 megawatts of supply sitting on the sidelines as the NEM faces a blackout threat.
On Tuesday the Australian Energy Regulator released a letter sent to generators warning them they must bid capacity into the market despite a $300MWh cap put in place by the Australian Energy Market Operator.\
AEMO said on Wednesday it believed 2000 megawatts of power in each of Queensland and NSW has not been bid into the market – a situation which has helped trigger warnings of blackouts in all NEM states – Tasmania, Victoria, South Australia, Queensland and NSW – on Tuesday and Wednesday nights.
As the late Kerry Packer told a Senate hearing into his tax affairs in 1991:
I didn’t try to sneak around the back door, or sneak underneath it … I read the rules and said, “What am I allowed to do?” And that’s exactly what we’ve done. Now, why do you want to change the rules again?
From the time I was 18, 19 years of age to now, there must be 10,000 new laws being passed, and I don’t really think it’s that much better a place.
As Packer also pointed out, the rules he abided by were the rules made by the very politicians who were now complaining about him using their rules as he was allowed.
Gas-fired generators need a price of over $500MWh to turn a profit given soaring spot prices for the fossil fuel, sources said, illustrating why some electricity suppliers are withdrawing from a market offering a $300MWh price cap.
Why is gas so expensive? The catch-all excuse is “Putin!” but that’s only partially true. A great deal of the soaring cost is also because of restrictions imposed in response to climate lobbying. Natural gas isn’t just used for fuel, of course: it’s also essential for producing fertilisers for food production.
Gas is also in desperate demand because coal generation has either been shut down entirely or allowed to deteriorate to the point of breaking down — also in the name of climate lobbying. Climate activists have fiercely lobbied investors to withdraw from coal generation assets. Australia’s own billionaire green loon, Mike Cannon-Brookes, for instance, has tried to takeover generator AGL in a bid to force it to shut down its coal plants.
At the same time, as has happened everywhere, wind and solar have proven to be unreliable, expensive duds. Hence the scramble for the gas which everyone needs just as badly. Short supply, increased demand: basic economics, prices go up.
And, as always happens, government meddling only makes it worse.
The letter was released after the energy market operator flagged potential blackouts in Victoria, Tasmania and South Australia for Wednesday evening as the east coast power crisis deepens.
The Australian Energy Market Operator widened a rarely-used cap of $300 a megawatt hour to the two southern states on Tuesday after electricity spot prices soared over the last week, meaning the control now applies to all four states in the national electricity market.
The cap means some generators have withdrawn capacity to the power grid which has led to forecast supply shortfalls and the potential for electricity blackouts in both NSW and Queensland from 5pm to 9pm on Tuesday, AEMO said.
The Australian
In 2016, Tasmania narrowly escaped state-wide blackouts. Why? The Gillard government’s carbon tax was an incentive for the state’s hydro generator to reap massive windfall profits in carbon credits, by selling emissions-free electricity to the Mainland market. Tasmania’s electricity is almost entirely hydro, so that meant recklessly draining the state’s dams to generate the electricity to on-sell. That, combined with a drier-than-usual summer, suddenly meant that our lakes came within a whisker of being drained completely. At the same time, the BassLink cable broke, leaving the island state unable to buy electricity back off the Mainland.
Tell me this isn’t a government operation, indeed.
Successive governments, on both sides, in thrall to the climate cult, have set up these Byzantine rules — now they’re acting surprised that companies are taking advantage of the rules.
And suddenly we’re facing power shortages in the middle of an unusually cold winter.
Thanks, government!