A week of unusual occurrences in the South Australian energy space fascinated many onlookers, particularly large energy users.
After fielding a number of calls from large energy users in South Australia who were wanting to know what was going on, our CEO, Paul McArdle wrote this article on WattClarity to explain why they were concerned, to note observations about what happened and to state the possible implications for the future.
Our CEO, Paul McArdle has provided insights to Duncan Hughes from the Australian Financial Review in regards to how a power upgrade delay may cost energy users.
The article begins:
“DEFERRING until 2015 a $120 million upgrade of an electricity interconnector between Queensland and NSW will cost energy users about $5 billion in higher charges, major energy users say.
They claim an arcane formula – called the regulatory test – used to assess the merits of boosting the interconnector fails to take account for the real impact of the outcome on their costs.”
With the author quotes Paul commenting on the situation’s effects:
“Paul McArdle, managing director of market monitor NEM-Watch, said higher generating prices in summer peak periods would raise costs by $690 million a year, or about $5 billion for the next seven years.”
After energy prices in Queensland soared close to near record level, even though there was enough spare generating capacity to meet the demand spike, there was much confusion and outrage among major energy users.
Seeking insights to help explain the situation, our CEO, Paul McArdle was quoted by journalist Duncan Hughes from the Australian Financial Review:
“The managing director of market monitor NEM-Watch, Paul McArdle, said major Queensland companies with retail electricity contracts but some spot-price exposure such as Smorgon Steel, OneSteel, zinc smelters and magnesium producers, managed the risk by winding back operations during the peaks.”
Paul went on to explain how recent events in the industry were affecting prices:
“Demand across the National Electricity Market was very modest and there was oodles of capactiy, more than 38,000 MW, available. But with the demise of state-owned Enertrade there are only four significant generators in the state and they have no problems keeping the price above $9000. They are doing their shareholders a good service.”
“Attempts to top up supply from generators in NSW were constrained because the interconnector between the states could only export 200MW, which would have been insignificant for managing prices.“
A consultant for large energy users has sent in a compliment to the Global-Roam team for working hard to get him an answer to his query.
“I do want to thank you for your efforts and being so easy to work with. It was a challenging problem despite appearing to be a problem outside the NEM Review program, you still worked hard to get me an answer. I really appreciated this.”
David Headberry – Consultant
30th of October 2007
In his article in February 2006, Nigel Wilson from The Australian has quoted our CEO, Paul McArdle in his article “Smart new meters to cut power” in February 2006. Mr Wilson sought insights from Paul in relation to news that Australian household would be encouraged to use smart electricity meters to cut electricity bills and reduce pressure on governments to build new power stations: