News

New gas energy deal struck in South Australia on Day One post-Hazelwood

  • Electricity costs will not drop despite ACCC price gouging probe – Act Now!
  • Origin to supply Engie with gas to create 240MWs for South Australia
  • Government negotiating for cheaper gas pipeline fees

Today is Day One post Hazelwood, with the rusting energy producing dinosaur being placed on cold standby on Wednesday, with all turbines powered down and out of action. With that comes a loss of 1,600 MW of power.

There have been a lot of developments this week, most notably with the Australian Energy Market Operator making recommendations for wind farms to increase the safety load threshold to avoid a safety trip shutdowns.

The Federal Government has also launched a probe into pricing strategies by energy firms along with threats of price regulation, a move which power suppliers reacted angrily to.

Origin supplying Engie with gas to create 240MWs for South Australia

The new deal between Origin and Engie will see the former supply enough gas for the plant to operate at full capacity for three years

In the meantime, South Australia seems to be shoring up its reserves and a deal has been struck by Origin and Engie – Hazelwood’s owners – to fire up its second gas turbine at Engie’s Pelican Point generator.

Although Engie has gone public with its plans to move out of the coal and fossil fuel sector and focus on renewables, this deal will ensure that Pelican point will  work at full capacity for at least three years.

Origin will supply gas to Engie in return for 240 MW of power which will be generated in the second turbine. It has been idle because it was not viable to run for a few days a year and this deal will push total output up to 479 MW of power by this July.

Energy Minister Josh Frydenberg said Federal Government pressure is helping

Federal Minister Josh Frydenberg – who recently broke rank with PMTurnbull by trying to put the onus of responsibility onto the customer using less energy – seemed to try and atone for his faux pas. He said that Mr Turnbull’s threats of export controls on gas have had an impact.

Federal Government scrambling to regain ground in the polls

The Federal government is scrambling to claw back some popularity following the WA election drubbing, the 10 point Labor poll lead and surveys consistently showing that energy costs are the number one worry for Australians.

It is keen to be at the forefront of anything energy related, but the truth is that the Origin-Engie deal was hatched over months of negotiation, not just in the last few days.

Energy companies, seemingly with their tail between their legs following the brief given to the ACCC inquiry team, have also been quick to try and claim the plaudits.

Origin chief executive Frank Calabria said the agreements were “examples of immediate steps industry is taking to safeguard electricity supply” and ensure more gas was available for customers.

In the pipeline

Energy Ministry Frydenberg also announced that he secured a commitment from pipeline companies, in order for gas to be supplied at “a reasonable price” when demand was high.

In typical doublespeak, the Minister would not commit to an actual figure, saying that what constituted a “reasonable price” was still to be worked out, he said.

The meeting also discussed accelerating pipeline competition reforms being demanded by producers such as Shell and Santos, which says it costs more to send gas from Queensland to Victoria than to ship it to north-east Asia.

Energy costs are not going down – Act now to shield your business

The government ordered ACCC inquiry is a good thing, but that does not mean that your bills are going to go down any time soon. The real findings into price gouging claims will not be known until well into 2018. Retailers are reportedly rattled, and while we can expect a pressure release, bill costs – particularly for businesses – will continue to rise.

The Australian Energy Market Commission has projected that this year, the average household bill will rise between $28 and $204. Leading Edge offers a suite of services which can help you shield your business from further price hikes. We offer Retail Energy Tenders, Invoice Analysis & Verification Services, Energy Reporting & Metering Systems, Energy Efficiency Projects, Solar Energy Tenders and Energy Project Financing.

You can read more about Leading Edge’s expert advice and services in this section of our website.

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