The Great Watt and Pole Swindle

“Ever get the feeling you’ve been cheated?”

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To put you in the mood for some truly “shocking” news – you’d best view this first.

Now, while that clearly wasn’t the CEO of AGL telling it like it is – it could have been “the message” yesterday (3.6.13) – when South Australia was paying a diabolical $12,199.20/MWh for nothing more than an hour’s worth of sparks.

Please be seated when you digest this report on SA’s power prices on 3 June 2013 – STT takes no responsibility for elevated blood pressure or cardiac events – you have been warned.  The numbers have been confirmed with AEMO – the market operator.

No – the power punters in SA didn’t get 10 ounces of Gold – or 12 nights at the Hilton – for their 12 grand.  That was the cost of a SINGLE MW hour of electricity in South Australia during several price “spikes” during the trading period on 3 June.

And for much of the day, the price exceeded $2,000 per MW/h.  That’s 2 grand for an hour’s worth of “excited matter” – not 3 bottles of 56 Grange.

The Croweaters were paying through the nose, simply because the wind does what it has done since the dawn of time: it stopped blowing. What a “surprise”.

Here’s the wind farm output for SA yesterday (the combined output for SA, VIC, TAS, NSW and QLD wasn’t much better – click on “change date” and select 3 June).  If this graph doesn’t appear sharp as a tack, click on it, it will open in a new window and look crystal clear.

Next time a greentard, eco-facist or wind industry goon starts waffling on about a “distributed network” or that “the wind is always blowing somewhere” take them to this graph. In 2010, this scenario played out over 100 times across the entire Eastern Grid

Of SA’s total “installed wind power capacity” of 1,223 MW, the sum total output was a big fat doughnut from lunch time, and never more than 200 MW (or 16% of notional capacity).  Note the collapse in wind power output starts around 5am, the plummet follows and the graph looks like a scene from the film “Flatliners” for the rest of the day.

At the point when demand was picking up, wind power was barely able to run a 5 watt globe.  But never mind, the “evil” fossil fuel boys were there to back up the wind weasels who ran out of puff.

The fact that there wasn’t enough wind to blow out a candle in SA, meant that the 40% of its installed capacity in wind power was as useful as the third wheel on a bicycle.

This in turn meant that the grid managers had to scrounge around for enough power to keep the lights on in SA.  The only thing that avoided a brush with the stone age was the ageing Playford Power Station at Pt Augusta, which was cranked into gear to save the day.

The other big fat lie that has been told over and over again by the wind industry, the cartel that controls power prices and the pollies like Gillard, Combet & Co that run “interference” for them – is that the wild escalation of power prices in the last 2 years is all about network operators recouping their investments in “poles and wires”.  As Johnny Rotten might have put it: “what a complete load of bollocks”.

The chiseling that took place yesterday (and which is forecast to continue for the rest of the week) is all about the need to back-fill the grid when the wind stops blowing. If there is no supply available from wind power the whole dang lot has got to come from conventional sources – at ENORMOUS COST to power consumers.

With base-load sources fully committed, this means that the shortfall is made up from Gas Turbines, including Open Cycle Gas Turbines (a jet engine hooked up to a small generator) which cost at least $300 per MW/h to run and which are highly inefficient (AGL has a stack of them right next to several of their wind farms, including a plant at Macarthur.  Energy Australia “helpfully” runs an OCGT peaking power plant right next to AGL’s Hallett wind farms).

Energy Australia’s OCGT peaking power plant at Hallett, SA.

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With the grid managers panicking to keep the lights on, it’s not so much a case of them asking the generators “how much will it cost?” – as the generators asking the grid managers “how much have you got?”.

Gas or coal thermal or hydro ordinarily wholesales for around $30-40 MW/h, and tops out around $90 MW/h, during periods of peak demand.

Instead of paying $40-90 per MW/h, the Croweaters were paying – for a single MW/h of power – what might be a fair down payment on a new car for most of the day and what might get you a smart little Korean job for parts of it.

Prizes for the STT reader that gives the correct answer to the following: what is the percentage increase from $40 to $2,100?  And, for the bonus points: what is the percentage increase from $40 to $12,199.20?

This rampant price chiseling is all about the need to back-fill the grid when the wind stops blowing and has nothing to do with “poles and wires”.  In truth, the problem is not so much about the price of wind power when it is supplied to the grid, but about the cost of meeting demand from conventional sources when the wind stops blowing and the wind farms are producing nothing.

This is not the first time this has happened and it won’t be the last.

Much the same corporate shenanigans went on in the US a decade ago when Enron used “rolling blackouts” to manipulate the power market in California to huge advantage.  The Enron boys would use “forward” markets to hedge against price movements and then “engineer” blackouts by turning off gas pipelines, or shutting generation plants for short periods, etc.  They also got into wind power in a big way, because nature provided the unscheduled “outage” they needed, so they could profit very handsomely from selling “peaking power” to desperate grid operators when the wind stopped blowing.  Sound familiar?

For a recap on how the Enron swindlers did it, check out the Enron documentary – The Smartest Guys in the Room.

AGL is one of the big “players” in the wind scam in SA, but no fools these boys.  They own a series of peaking power plants that are geared to cash in on the crisis created when the wind stops blowing by “helping” to make up the shortfall. Looks like they are set to “clean up” this week in SA.

The boys that ran Enron, until they were rounded up in chains, would call it maximising market opportunities.

STT calls it State sponsored theft.

Stand and deliver!