SA’s Self-Inflicted Power Debacle: Instead of $550m on Diesel Generators & Batteries, $25m Could Have Saved Baseload Plant & the State

Good governance requires more than just a little common sense. The antithesis of good governance is arrogance, hubris and ideology.

In Australia’s so-called ‘wind power capital’, South Australia, its hapless Labor government could never be accused of letting common sense get in the way of its efforts to destroy any remaining economic advantage that the beleaguered and mendicant state might still possess.

SA’s vapid Premier, Jay Weatherill, in a last-ditch attempt to keep the lights on, determined a few weeks back to throw $550 million of taxpayers’ money at a 100MW battery that would power South Australia for all of four minutes and 200-250MW of diesel generation capacity which would cost over $400 per MWh to run, compared with the $40 per MWh that power from the now-defunct Port Augusta power plant once cost to produce.

After trying to convince the media and his long-suffering constituents that there was no deal to keep Port Augusta up and running, Weatherill was forced to face the music as documents came to light that showed just how ridiculous he and his wind-worshipping acolytes have become.

If South Australians weren’t furious at being crippled by rocketing power prices, statewide blackouts and mass load shedding, they surely will be when they learn that SA’s power crisis could have been avoided for a paltry $25 million.

Jay Weatherill rejected $25m deal to save Northern power station
The Australian
Michael Owen and Meredith Booth
30 March 2017

Keeping South Australia’s last coal-fired power station open would have “crowded out other forms of investment” in the ­energy market, Premier Jay Weatherill says.

The Premier came under intense­ political pressure yesterday after details emerged of a secret­ offer from Alinta Energy to keep the Northern power station in Port Augusta operational in ­return for $25 million from the state government.

Last night, Seven News report­ed that a further letter of offer was made in June 2015 from Alinta to the government of “handing the asset back … on a walk-in, walk-out basis”, but this offer to effect­ively give the state the power station for free also was rejected.

The revelations came just a fortnight after the Premier flatly denied that any offer existed, and ­accused The Australian at the time of promoting false information.

But in parliament yesterday, Mr Weatherill changed tack, and said Alinta had offered “no guarantee” of remaining open until mid-2018 under its offer.

“The proposition that seems to be advanced here is that the South Australian taxpayer should have slung tens of millions of dollars to a private company on the basis they might stay open,” he said.

“Our modelling demonstrated that if we were investing in coal-fired generators, and even if they were managing to stay open despite­ all the caveats they put in their offer, today Pelican Point would not be open. It would have crowded out other forms of investment in the South Australian ­energy market.”

French company Engie, which owns the Hazelwood plant in Victoria­, announced yesterday that it would bring its gas-fired Pelican Point plant, 25km northwest of Adelaide, back to full cap­acity of 479 megawatts from July.

The move has been underpinned by a long-term gas supply contract with Origin Energy and agreements with several customers. The company will spend $40m to upgrade a second unit.

But state Opposition Leader Steven Marshall said system ­reliability could have been maintained for $8m a year, rather than the $550m the government will spend on a new energy plan that includes a $360m gas-fired plant to stabilise the wind-reliant grid.

“What have we got now? The highest electricity prices in the ­nation, the least reliable grid and it all could have been avoided for just $8m per year,” he said.

“It would have saved hundreds and hundreds of jobs.” A letter ­obtained by the Liberal Party and released yesterday provides ­details of Alinta’s bid in May 2015 to keep its 520MW plant open.

But this was rejected and it was forced to close as a result of the state government’s pursuit of a 50 per cent renewable energy target­. When the power station closed last May there were immediate­ price surges of almost 75 per cent. The government also ­ignored warnings in a Frontier Economics report from July 2015 that the state faced higher energy prices and a statewide blackout if it ­allowed the exit of its only major baseload power station.

When The Australian asked the Premier two weeks ago about Alinta’s offer, he denied it: “We’ve never been offered anything from Alinta … that’s a false piece of ­information you’ve just promoted”. Federal Energy Minister Josh Frydenberg called Mr Weatherill the “Premier with no clothes”.

“Clearly Jay Weatherill should have accepted that offer, clearly Jay Weatherill should have prepared better for the situation he has got his state in,” he said.

Yesterday in Port Augusta, twins Brett and Matthew Prentice, 55, who had worked at the Northern power station for 30 years, were “disappointed but not ­surprised” by the revelations.

Brett, an IT expert who now runs a handyman business, said Labor was “prepared to risk” the state’s energy future because of an “ideological dislike for coal-fired power”.

“It was ­always known we could have blackouts without the power station, it was just a stupid thing to do, just plain crazy. It is dis­appointing the government could have saved the problems and hundreds of jobs but chose not to.”
The Australian

Tom Koutsantonis: ready to reject any reasonable offer…

***

Here’s the local rag, The Advertiser’s take on the debacle.

Shocking Secret
The Advertiser
Paul Starick
29 March 2017

Just $25m could have saved key Port Augusta power station Now, we’ll pay $550m for electricity rescue THE owner of the now-defunct Port Augusta power station offered to keep generating electricity until mid-2018 in return for just $25 million from the State Government – 22 times less than its new $550 million power plan.

Extensive details of Alinta Energy’s bid to save the 520-megawatt Northern plant’s operation are revealed in a May 2015 letter from the company to the Government, which has kept it secret.

Seizing on the explosive revelations, Liberal leader Steven Marshall said the rejection of an affordable deal to keep power prices down and prevent blackouts was “the biggest failure of a State Government since the (1991) State Bank disaster”.

In the six-page letter, obtained by the Liberals, Alinta warns of significant risk to the security of South Australia’s power supply and a surge in electricity prices – costing the state $56 million to $112 million a year – if the power station and associated Leigh Creek brown coal mine were to close.

Other sources have told The Advertiser Alinta made another bid for $30 million to the government, which made a rejected counter-offer of only $8 million. Alinta then announced in June 2015 it would close the station.

The secret Alinta letter revealed today also warned that closure of Flinders Power, which included the Northern power station and Leigh Creek, would trigger a $150 million annual blow to regional GDP and cost 450 jobs.

The bulk of Alinta’s demand was for a 70 per cent subsidy of maintenance costs for the 250km Leigh Creek railway, which supplied brown coal to the power plant – equivalent to about $8 million over three years.

SA has been hit by three major blackouts, including a statewide outage last September, since the closure in May of Alinta’s Flinders Power operation. Businesses across the state took an estimated $450 million hit because of the statewide blackout. Mining giant BHP Billiton says outages at Olympic Dam cost it $137 million. Electricity prices for forward contracts in SA have jumped from about $80 per megawatt hour in mid-2016 to about $140MW/h.

Premier Jay Weatherill this month branded the Port Augusta plant a “clunky, old, coal-fired power station”. He declared Alinta’s temporary offer did not secure SA’s energy future and cited a confidentiality agreement to refuse to release details.

Alinta this month said it would not make public its proposal to save the Port Augusta plant, citing commercial confidentiality, but said any decision about releasing details “rests with the Government”.

Responding to the letter late yesterday, Energy Minister Tom Koutsantonis told The Advertiser it was a small part of complex and detailed talks and, therefore, did not represent the entire scope of negotiations.

Labor’s $550 million plan for reliable, affordable and clean power, unveiled this month, is headlined by a $360 million, government-owned gas-fired generator providing up to 250MW and Australia’s largest battery to store wind and solar energy.

Mr Marshall said it was now clear why Mr Weatherill had been fighting to keep Alinta’s proposed deal secret. “Every time South Australians open their power bill or the lights go out, they should think about Jay Weatherill and his decision to close the Northern power station,” he said. “The only thing that will be more scandalous than rejecting Alinta’s offer will be Jay Weatherill continuing to defend his decision. (He) has sold out South Australians for his ideological pursuit of intermittent renewable energy.” Northern’s 520MW would have supplied almost a quarter of SA’s peak summer demand this year of 2264MW, while the planned 250MW state-owned power station would produce one-ninth of that peak.

In Alinta’s letter to the SA Government Financing Authority, the energy company’s executive director of external affairs, Michael Riches, states the Port Augusta plant and Leigh Creek mine would have lost about $10 million a year if operations continued until 2020.

Alinta asked for net payments from the State Government of about $25 million over three years, to ensure the power station and coal mine operated until June 30, 2018.

Other key measures the company sought included: UP to $4.5 million a year for Leigh Creek town services and $1 million for the town’s airstrip and water supply dam.

CHANGES to lease arrangements for Leigh Creek railway and township, particularly cutting from 36 months to six months the extension notice period. If extended, no rent would be payable.

REMOVAL of minimum handback conditions of the Port Augusta power station land but agreeing to meet environmental laws.

EXTENSION of the existing coal royalty rate to 2020.

Mr Koutsantonis told The Advertiser the Northern Power Station, regardless of the nature of the request, could not provide the services the state needed to “take charge of our energy future”.

“Alinta were also not able to provide any guarantees about how long they could continue to operate, and CEO Jeff Dimery has said publicly the business was losing money and running out of coal,” he said. “The Government has launch-ed its energy plan, which will drive local generation, improve grid security and put downward pressure on power prices.” Alinta did not respond to requests for comment yesterday but told The Advertiser in February Flinders Power had explored “a variety of options with multiple counterparties to continue operations” of the Northern power station.

“Ultimately, none of the options were economically viable,” the company said.

Timeline: Top Secret – Note to be seen by SA Taxpayers – How it came to this

  • 1954: Playford A Power Station commissioned on reclaimed land at the northern tip of Spencer Gulf, just south of Port Augusta. Uses brown coal from the Leigh Creek mine, 250km north. The coal is transported via rail.
  • 1963: Site expanded to accommodate the 240MW Playford B Power Station. 1980-84: Leigh Creek town is relocated 22km south of the coalfield to allow for the expansion of the mine.
  • 1985: 520MW Northern Power Station built on adjacent site.
  • 1999: ETSA privatised and power stations change ownership several times. 2007: Alinta Energy assumes control when former owners Babcock & Brown Power acquire Alinta. The name changes in 2010.
  • 2012: Playford B mothballed. Previously, had mostly operated in summer to help meet peak demand.
  • May, 2015: Alinta writes to the State Government, offering to keep open for three years the Flinders business — Leigh Creek and Port Augusta power stations — conditional upon a State Government subsidy of about $25 million.
  • June, 2015: The Advertiser exclusively reveals the Port Augusta power stations and Leigh Creek coal mine will close by 2018, costing 450 jobs.
  • April, 2016: Final coal hauled from Leigh Creek to the Port Augusta power stations.
  • May, 2016: Northern Power Station stops generating electricity. September, 2016: Playford smoke stack demolished.
  • September 28, 2016: State blacked out as fierce storms topple pylons, triggering wind farm turbine failures. Interconnector providing power from interstate is tripped.
  • December, 2016: About 155,000 properties without power at the peak of post-Christmas blackouts triggered by severe storms.
  • February 8, 2017: 90,000 electricity customers lose power when dwindling electricity supplies force load shedding to maintain the stability of the grid.

What Alinta wanted

Port Augusta power stations and Leigh Creek mine would have lost about $10 million per year if operations continued to 2020. Alinta, in May 2015, asked for net payments from the State Government of about $25 million over three years to ensure the power stations and coal mine operated until June 30, 2018.

Alinta’s key demands were: – About $4.5 million a year for Leigh Creek town services and up to $1 million for forecast infrastructure spend on town airstrip and dam.

  • Government to meet 70 per cent of Leigh Creek railway maintenance costs, aq figure that works out to about $8 million per year on average.
  • Changes to the lease arrangements for the Leigh Creek railway and township, to reduce the notice period for seeking an extension from 36 months to six months, with no rent payable if the lease was extended.
  • Removal of minimum handback condition of Port Augusta power station land under lease with Government but meeting environmental laws.
  • Extension of existing coal royalty rate to 2020.

What Alinta warned

Closure of Port Augusta power plant would trigger: – Significant risk generally to SA’s power supply security.

  • Likely increase in wholesale cost of electricity, between $4-8 per megawatt hour. This would cost SA economy $56- $112 million a year. $150 million of regional gross domestic product is cut.
  • $4.5 million lost revenue in foregone coal royalties in payroll tax.

How the SA Government tried to keep it secret

The Government has been at pains to keep secret how much financial assistance was sought by Alinta to keep the Northern power station open until 2018, denying Opposition Freedom of Information requests for related documents. Premier Jay Weatherill has said that he “can’t say” anything about Alinta’s offer because of a confidentiality agreement.Earlier this month, Mr Koutsantonis said he would be “happy” to discuss the offer “if Alinta says it’s OK”. Alinta then declined to release detail, citing commercial confidentiality, saying this “rests with the Government”.
The Advertiser

Premier proves it takes deliberate and concerted action
to destroy a power grid & wreck an economy.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Hi,

    I started a PETITION “SA PREMIER JAY WEATHERILL : Demand the RESIGNATION of the Energy Minister for HIGH POWER PRICES CAUSING SA’s JOBS CRISIS and 15,000 household POWER DISCONNECTIONS, frequent POWER BLACKOUTS and the JULY 2016 POWER CRISIS” and wanted to see if you could help by adding your name.

    Our goal is to reach 200 signatures and we need more support.

    You can read more and sign the petition here:

    https://www.change.org/p/sa-premier-jay-weatherill-demand-the-resignation-of-the-energy-minister-for-high-power-prices-causing-sa-s-jobs-crisis-and-also-15-000-household-power-disconnections-frequent-power-blackouts-and-the-july-2016-power-crisis?recruiter=135406845&utm_source=share_petition&utm_medium=email&utm_campaign=share_email_responsive

    Please share this petition with anyone you think may be interested in signing it.

    Thankyou for your time.

  2. The worst of it all is that CO2 has never shown to be controlling the Earth’s weather, while the evaporation and condensation of water transports vast amounts of the Sun’s energy from the surface back into space. In addition, the tops of clouds reflect 90% of the Sun’s heating Radiation back into space. There is no possible way for the 0.3% of Earth’s atmosphere that is CO2 can do anything like that, since CO2 does not become liquid at all, and can only freeze on Earth, but at minus 209 Degrees Farenheit,that never happens anywhere. What is really happening is being covered up by NOAA and NASA, as they declare year after year of heating that is not happening. Satellite and surface measurements agree (NASA and NOAA’s Own measurements) show no heating since 2003, but they have gone back and lowered their own reported measurements published decades ago and keep raising today’s reports with artificial adjustments to continue their story of Global Warming. What we are seeing, in fact, is a declining in Earth’s temperatures as the Mini Ice Age of 2030-2050 predicted by Theodor Landscheidt, Carl Smith and Geoff Sharp continues to engage. We will need ALL forms of energy just to keep warm, and the production of food away from the equator will decline dramatically. For proofs, and for clear evidence, see Paullitely.com and the youtube series Adapt 2030.

  3. The underlying problem is that currently federal legislation prevents States from implementing nuclear power. In SA’s case this is particularly sad because it has some of the world’s richest uranium deposits that could – if not exported- power SA for well over a thousand years

    We are stuck with the crap a deluded pseudo religious phoney Green Movement has landed on us through their minority balance of power in Parliaments

    If they woke up to reality we would have nuclear power stations supported by renewable energy, including hydro – massive amounts of excess power – a booming economy and NO CO2 emissions

    A ship of well meaning fools detrimental to their own aims.

  4. Jackie Rovensky says:

    So Labor were already before the closure of Alinta looking to “take charge of our energy future” according to Koutsantonis. Now that is something they hadn’t mentioned before or was it just another of his smart remarks to cover their miserable management skills.
    All this rubbish about if they were to keep Alinta open it would smother other forms of energy production coming into the market – what a load of old codswallop.
    None came in after it closed UNTIL Weatherill and his party of no sense decided they just had to accept Gas, solar, solar thermal and battery’s were needed to keep the power on. With Gas as the base-load producer.
    It should be remembered that Solar Thermal was being discussed and seeking approval and assistance even before Alinta shut down, but Weatherill etc did not support or encourage it.
    You need to wonder why they continued to sideline anything but Wind – actually you don’t need to wonder you just have to look at the history of Wind in SA, its been the ‘chosen one’ from the start, the one that Minister Rau changed the Planning Regulations for, the one that this State Government ensured no opposition to it would be acceptable, it’s how Rann went into a rage in Parliament when he heard the ERD court had stopped a wind project in the SE and it should be remembered that Rann had to declare a conflict of interest in another project, due to a family member being involved in the industry, and another had apparently been involved in another one – no declaration there though.
    It’s time this lot of churlish wasters accepted they have sent this wonderful State into a downward spiral that will take many years to recover from and there is no one to blame but themselves.

  5. Reblogged this on Climatism and commented:
    The title says it all.

    Disgraceful abuse of hard-working taxpayers money.

    And yet another great example of how “green centralised planning” has catastrophically failed, just like “economic centralised planning” has failed communist/socialist states gone by.

    How much more of *other people’s money* will it take for the eco-loons to realise that their climate-obsessed ideology and subsequent energy solutions are defunct?

  6. One can only ask why the people of SA are not marching thru the streets in protest against this whole debacle? When the majority stay quiet & do nothing, the minority push thru with their agenda. We are seeing this time & again with various situations in Australia & it’s probably time to make a real noise!!
    Thank you STT for continuing to bring the truth out in regards to wind power & the corruption & lies that continue to be fed to the population. Thankfully more people are realising that they have been fed a banquet of lies. One can only hope & pray that honesty prevails as the truth keeps being revealed.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: