Renewables Disaster Deepens: Power Costs to Australian Businesses Triple

Brought to you by costly, subsidised, occasional power …

 

It’s almost as if Australia’s rocketing power prices, unstable grid, load-shedding and blackouts were an unexpected surprise, something that must’ve been introduced by intergalactic forces.

Here’s an extract from a Press Release STT put out back before the Wind Power Fraud Rally in Canberra in June 2013:

PRESS RELEASE: 7 MAY 2013

Wind Power Fraud – Australia Can’t Afford it

Power bills have sky-rocketed and are set to double again – and all because of wind power.

Wind turbines are going up throughout rural Australia in an effort to satisfy the Federal Government’s 2020 Renewable Energy Target (RET).

Every turbine is issued between 8,000 to 10,000 Renewable Energy Certificates (RECs) every year, which is, in effect, a Federal Government tax on power consumers. Each REC is currently worth around $35: a single turbine will be issued between $280,000 and $350,000 worth of RECs this year. Retailers are forced by the RET to take wind power at prices up to 4 times the cost of hydro, gas or coal fired power.

Under the REC tax scheme power consumers are being forced to subsidise wind power. The REC tax and the exorbitant prices retailers are forced to pay for wind power are added directly to your power bills.

The REC price will rise to $90, if the current REC tax system is maintained. This means that wind farm operators will be issued between $700,000 and $900,000 worth of RECs for each turbine every year until 2031: a subsidy paid by power consumers, worth more than $12 million per turbine.

From now until 2031 RECs worth an estimated $52 billion will be issued. As a result, household power prices are set to more than double again over the next 2-3 years.

In South Australia wind power now makes up around 35% of its total generating capacity, all attracting the REC tax. With the REC tax and the exorbitant cost of wind power added directly to power bills, SA will soon have the highest retail power prices in the world.

That was four years ago, and we were laughed at. There is, however, an adage about he who laughs last.

Sometimes though, there is nothing funny about being right.

Australia’s businesses are beside themselves, as they face the punishing reality of what we predicted, way back then.

Power price wave slams business: Commercial customers face tripling costs
Australian Financial Review
Angela MacDonald-Smith
30 June 2017

A destructive wave of energy bill increases is poised to sweep across businesses and households from July 1, and some commercial customers will be hit by a tripling in electricity prices after the closure of the Hazelwood coal generator.

The news of the price increase coincides with a sudden escalation of concern over the overstretched east coast gas market after the unexpected shutdown of a major offshore platform in the Bass Strait just before a cold snap in the south-east.

The shutdown has cut gas supply from the biggest supply source for the east coast by 15 per cent and triggered a sharp spike in wholesale gas tariffs, underscoring the pressures being felt across the energy sector.

Businesses coming off multi-year electricity contracts signed when the power market was in oversupply will suffer worst in the wave of retail price increases, seeing jumps in their total energy bills that will dwarf the up to 20 per cent rise some households face.

Victoria-based Wilson Transformer Co is preparing for an 83 per cent surge in its annual power bill from about $800,000 to almost $1.5 million, including a more-than-threefold jump in the electricity component of the charge, said executive chairman Robert Wilson. Its price for peak power is going from just under 4.4¢ a kilowatt-hour to about 15.4¢, while its off-peak tariff will jump from just over 2.5¢/kWh to about 9.65¢.

“It’s been a shock,” Mr Wilson said. “We can’t change our prices because we are an import-export competing business so it’s just straight off the bottom line.”

Mr Wilson and other consumers blame the shutdown by French-owned Engie in March of its 1600-megawatt brown coal Hazelwood plant in the Latrobe Valley for the price increases. The closure removed a big source of low-cost baseload power from the market and made much dearer gas-fired generation the price setter across the wholesale market, sending prices soaring.

“We all know it’s a dirty old brown coal power station but the reality is, it shouldn’t have been closed so dramatically quickly; it’s just disrupted the market,” Mr Wilson said.

Hazelwood is only part of the story of the dramatic transformation in the power market since Wilson Transformer took out its last electricity purchasing contract, said Jon Stretch, chief executive of ERM Power, which had supplied the Melbourne-based power transformer manufacturer before losing the contract to Origin in the past few weeks.

“That’s the period where we’ve seen this incredible increase in the wholesale market; it doesn’t matter which retailer you are talking to,” Mr Stretch said, pointing to the shutdown of Alinta’s Northern coal generator in South Australia and other coal plants, which has cut the supply of baseload power and increased reliance on intermittent renewables.

Contract prices for commercial customers are based on the forward market on the day they are signed so increases in wholesale tariffs go straight through on the contracts, Mr Stretch noted.

While the hit to businesses from higher electricity and gas prices has been making headlines all year, so far it’s only the tip of the iceberg that has been evident, with a whole lot more to come, said Ivan Slavich, chief executive of electricity procurement advisor Energy Action.

“My guess would be that only 20 or 30 per cent of business have really felt it,” Mr Slavich said.

“It’s those electricity and gas customers that are coming off contract, that’s when they get impacted. They may have signed a deal back in 2012 or 2013 for a five year contract and it’s only now coming up for renewal.”

He said one of the bigger clients of Energy Action, which advises Wilson, was looking at a $12 million increase in its annual power bill to $32 million, one of several increases set to hit in the new financial year.

The unexpected shutdown of the Marlin B platform owned by Esso-BHP Billiton is meanwhile fraying nerves on supply just as the southern states head into the coldest weeks of the year when gas demand peaks in Victoria.

A drop in scheduled production from Esso-BHP’s Longford gas plant from 802 terajoules a day to about 640 TJ/d caused the Victoria wholesale gas price to just from $9.51 a gigajoule to $15.82 a gigajoule, said Josh Stabler, managing director of trader EnergyEdge.

“It’s just a really important asset, supplying in the order of 50 per cent of the southern market, so any hiccups at Longford are a major issue for the market,” Mr Stabler said.

“For the first kind of really big demand today, losing a quarter of Longford would be pretty painful.”

An Esso spokesman said the platform had been hit by an electrical fault and couldn’t say when it would be rectified.

Mr Slavich said he was surprised more businesses hadn’t been more aggressive in acting to limit the impact of rising energy bills by improving their power management and installing on-site generation such as solar panels.

“The tide’s gone out, there’s a tsunami on the horizon. I’m surprised more people are not running for the high country,” he said. “Once the tsunami hits you are now playing catch-up, as to initiate a reduction in energy usage takes time, it doesn’t happen overnight. Businesses should be absolutely doing that now.”

Federal Energy Minister Josh Frydenberg said the Turnbull government was taking immediate action to put downward pressure on power prices” and ensure reliable supply, pointing to the three measures announced by the Prime Minister last week.
Australian Financial Review

Don’t expect any results from this pair …

About stopthesethings

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

Comments

  1. Hi,

    here’s the link to the Petition on the Federal Government website for Australia to Withdraw from the Paris Climate Agreement.

    Please Sign it by clicking on the link below and please also share it with everyone you know. There are only 1418 signatures to date, so it needs to move FAST !

    Closing date for petition is 19/7/17.

    http://www.aph.gov.au/Parliamentary_Business/Petitions/House_of_Representatives_Petitions/Petitions_General/Sign_an_e-petition?id=EN0264

    Thankyou.

    Esther

  2. Jackie Rovensky says:

    Yes its all because of shortage of gas, and of businesses not refitting to a method that reduces their power usage – everything but the truth.
    It’s because of unreliable renewable energy production being given ‘pride of place’, and subsidised with no assistance to coal to re-fit or rebuild to utilise new clean coal technology.
    When will people accept the blooming obvious, we need to make use of the natural resources we have in this country.
    We need to drop our reliance on a natural source that cannot be relied on to be there when needed.
    A source which needs vast amounts of ‘dirty’ magnets to operate and ‘dirty’ batteries to store its offerings – if it can be stored that is and that has owners that need to be back-up with our money to keep their shareholders pockets over flowing.
    That needs special Planning regulations to ensure they can be plonked down wherever the companies want them to be – without having to ensure they operate to the regulations they are meant to keep to, which would help ensure the safety of the environment and all that lives in it.
    That have a straight line of communication with the National and State Government bodies so they can lie and deceive as much as they want because they are a protected specie.
    When will people accept they have been played for fools, there is no doubt these companies were well aware of the multiple failings of their monstrosities.
    Why else would they need to con and curry favour with those in charge if they had an efficient energy producing system which worked, was safe and cost effective.
    Its time for our Governments to come clean and pull the suckers of their backs and return to a system that has been proven over many years, a system that is ready to upgrade and utilise new technology and to provide them with the right opportunity to prosper by clearing the deck to allow them to operate unhindered by regulations which prevent them from flourishing and for the turbines to be stopped from spreading any further economic and social damage and to mandate to have them removed from our country – to have this wonderful country once again prosper and return to a country of peace and health.

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