News & Discussion: Electricity Infrastructure

[mawsonguy]

How the Snowy Scheme (only trotted out after the SA Government announces something) is going to be done for $2Bn is a complete mystery. There's 28kM of tunnels. How much did 13kM of tunnel in Melbourne cost under Napthine?

You're comparing apples with pears. There is a world of difference between building hydro-electric tunnels in the Snowy Mountains and digging a road tunnel under a city. For a start, you don't have the same expense of shipping spoil a long distance through a metroploitan area. Nor do you have the expense of building ventilation able to handle high traffic volumes, emergency access tunnels, high intensity lighting or concreteing the entire tunnel. The width is a lot less. Finally, soil/rock conditions in the Snowy Mountains are a known factor due to past digs whereas city tunnels are often an educated guess before large scale drilling takes place.

[rubberman]

How the Snowy Scheme (only trotted out after the SA Government announces something) is going to be done for $2Bn is a complete mystery. There's 28kM of tunnels. How much did 13kM of tunnel in Melbourne cost under Napthine?

You're comparing apples with pears. There is a world of difference between building hydro-electric tunnels in the Snowy Mountains and digging a road tunnel under a city. For a start, you don't have the same expense of shipping spoil a long distance through a metroploitan area. Nor do you have the expense of building ventilation able to handle high traffic volumes, emergency access tunnels, high intensity lighting or concreteing the entire tunnel. The width is a lot less. Finally, soil/rock conditions in the Snowy Mountains are a known factor due to past digs whereas city tunnels are often an educated guess before large scale drilling takes place.

I'm happy to make a bet that the Snowy guesstimate is not even half the real price. Your points are valid, or would be had the $2Bn considered any of that. My point is, the $2Bn was just pulled out of the air for purely political reasons a couple of days after the SA Premier started to do something about the worful situation that had developed in the aituation of a clear market failure and a lack of action by Canberra to coordinate policy.

Not good enough.

[bits]

http://www.abc.net.au/news/2017-04-03/s ... fmredir=sm

AGL now claim they had a blueprint for investment in SA.
Seems odd they had so long to build something but did not.

Seems only after the SA government announced they would take action that AGL have got worried and started releasing plans for investment.
Announcements are just talk until someone actually spends and builds.

[Waewick]

http://www.abc.net.au/news/2017-04-03/s ... fmredir=sm

AGL now claim they had a blueprint for investment in SA.
Seems odd they had so long to build something but did not.

Seems only after the SA government announced they would take action that AGL have got worried and started releasing plans for investment.
Announcements are just talk until someone actually spends and builds.

I don't think they are worried at all. They've just had the opportuniy provided to them to invest somewhere else.

[mawsonguy]

The Australian Conmstitution limits the powers of the Federal Government. The Federal Government has no power whatsoever over electricity generation or distribution. This is the exclusive responsibility of the states. The Federal Government was only able to build the Snowy Mountains scheme by invoking the defence power during the cold war. Because it is a shareholder in the resulting infrastructure it is able to expand on it. But it can't build power stations or electricity transmission lines elsewhere. Of course, it can provide funds to the States when asked but it was never asked to provide funds for electricity infrastructure in SA.

Interestingly, the failure to provide a reliable electricity supply to ASC means that the Federal Government can once again invoke the defence power to provide electricity to ASC.

[rubberman]

http://www.abc.net.au/news/2017-04-03/s ... fmredir=sm

AGL now claim they had a blueprint for investment in SA.
Seems odd they had so long to build something but did not.

Seems only after the SA government announced they would take action that AGL have got worried and started releasing plans for investment.
Announcements are just talk until someone actually spends and builds.

I don't think they are worried at all. They've just had the opportuniy provided to them to invest somewhere else.

Disclosure: I have enough shares in AGL to make it worth my while.

When the stuff hit the fan here recently, there was a news report showing AGL executives saying how a price on carbon is necessary, and would have provided incentives for them to invest, and that the present crisis would have been averted.

Now, that being the case, you'd wonder why they didn't say anything in 2013 When the "carbon TAX" was being debated. After all, as competent managers, you'd think they would have done research at that point. I'm sure they did, and I'm sure they knew what was coming once the carbon TAX was removed.

However, when it mattered to the people of SA, they didn't say a thing. Instead of letting people know that removal of the carbon TAX was going to deprive the market of an important pricing signal, they said zero. The carbon TAX was abolished, the market didn't signal for AGL to spend money in SA, and here we are. Hence I am not surprised at Jay Weatherall being shitty at AGL.

On the other hand, as a shareholder of AGL, I look at the share price and profitability. It has zoomed up. More than doubled since the 2013 election. By keeping quiet about the need for a price on carbon, thus helping it be abolished, the AGL directors have helped set up a scenario for the company to make mega profits for a goodly period.

Point being. SA sold its electricity system to private enterprise. Public company directors have to maximise shareholder value. They aren't answerable to the government, nor do they have to act with the best interests of the state in mind. So, if Jay is all hot and bothered, it's pointless directing anger at AGL because it didn't point out that abolishing the great big carbon TAX was a crap idea. Keeping quiet was the best thing for the share price ever. Jay instead should confine himself to politics and start head kicking John Olsen, Tony Abbott, and Turnbull

[rubberman]

The Australian Conmstitution limits the powers of the Federal Government. The Federal Government has no power whatsoever over electricity generation or distribution. This is the exclusive responsibility of the states. The Federal Government was only able to build the Snowy Mountains scheme by invoking the defence power during the cold war. Because it is a shareholder in the resulting infrastructure it is able to expand on it. But it can't build power stations or electricity transmission lines elsewhere. Of course, it can provide funds to the States when asked but it was never asked to provide funds for electricity infrastructure in SA.

Interestingly, the failure to provide a reliable electricity supply to ASC means that the Federal Government can once again invoke the defence power to provide electricity to ASC.

Actually, now that there's cross border power transmission, the Federal Government can enter the picture, in the same way and under the same powers it uses for highways or railwsys.

Next, as previously pointed out by AGL executives, the present situation could have been minimised/avoided by having a price on carbon. The Federal Government had one of those, but dropped it.

Thirdly, the Federal Government just announced it was going to expand the Snowy Scheme. That certainly would have an effect.

Finally, in many areas through COAG, the Commonwealth has coordinated a huge number of interstate intergovernmental issues of importance. This has been a huge game changer from everything from rail gauge standardisation, to manufacturing standards.

The Commonwealth has these very powerful levers at its command. It has failed to use any of them in any practical sense.

I don't count releasing a half baked $2Bn scheme suspiciously timed to boost a Newspoll as anything more than a brain fart.

[monotonehell]

I wonder if individuals' dividends received, outweighed their increase in energy bills.

[rubberman]

I wonder if individuals' dividends received, outweighed their increase in energy bills.

Well, just say you invested $30k in 2013. For most people, you'd be $850/annum better off after tax. And that $30k would be now $50k.

So, yeah.

[bits]

The Federal Government has no power whatsoever over electricity generation or distribution. This is the exclusive responsibility of the states.

Neither the States nor Federal Governments should pay to build any power station.

Even when a state does build a power station like the SA Government has planned, that generator can not compete in the market. As if the Government re-enters the market the private sector could not compete fairly, will run away and demand compensation for losses on the agreed terms of the privatization.

The power sector was privatized and if the market was working correctly the private sector would build new power stations so they could continue to make money.
The private sector has failed to invest.


One of the problems is that the entire private sector assume a carbon tax will be reintroduced and likely soon.
It is not IF a carbon tax will happen but WHEN will a carbon tax happen.
The Federal Government is the failure for the carbon tax everyone assumes is required and will happen but the Federal Government has given zero indications of when it will happen.

The other investment problem is existing generators prefer to reduce supply to increase the price of the remaining supply.
No new privates investors can enter the market because the existing generators can/would turn on unused generation capacity immediately to protect their market.
There is no current shortage of generation capacity, there is a shortage of competition, lack of investment to replace the aging unreliable infrastructure and lack of incentives to keep the power on.


-Private sector has entirely failed to invest.
-Federal Government temporarily removing carbon tax with no reinstatement date is one of the major factors for why the private sector has failed to invest.
-National market rules are the other major reason the private sector has failed to invest. There is incentives to reduce supply which increases prices, instead of there being incentives to keep the power on.
-SA Government steps in to fill the void that lack of investment from private sector and lack of Federal leadership which would lead to investment has left.
-SA should not have to fix the problem but is forced to due to the failures of the Federal Government policies, national market rules and the private sector.
-Federal Government knee-jerk announce they will build large power station for East Coast to fix a lack of private sector investment.
-Federal Government fail to invest to fix the exact same problem for SA and at the same time complain that SA is fixing what the Federal Government isn't.
-Private sector announce they were planning to plan to invest at an undefined future date but now will instead do exactly what they had done for a decade, not much at all and profit insanely in the process.


PS non-infrastructure of actual things companies are talking about spending money on should probably be in The Pub thread

[Aidan]

Neither the States nor Federal Governments should pay to build any power station.

The private sector has shown itself to be inefficient at getting power stations built, so government intervention is certainly justified.

Even when a state does build a power station like the SA Government has planned, that generator can not compete in the market.

An ideological assumption that has no basis in reality!

As if the Government re-enters the market the private sector could not compete fairly, will run away and demand compensation for losses on the agreed terms of the privatization.

The truth is almost the exact opposite: the government reentering the market is the thing most likely to make the private sector compete fairly. They can't demand compensation, because to do so they'd have to admit they've been ripping us off for years.

[Vee]

Good explanation of the '5-Minute Rule' proposal to help negate current price spikes (facilitated by 30 minute costing intervals) during peak demand - and generation operators gaming the system for exorbitant charges.

This rule is espoused by John Hewson, Simon Holmes à Court and others and forms part of an open letter advertisement in the AFR for ..."straightforward changes to fix ‘energy trilemma".

‘5-minute rule’ identified as key to immediate and responsible fix for peak-load issues.

The Australia Institute has today published an open letter to the Prime Minister calling for three market reforms to address the ‘energy trilemma’: security, cost and emissions.

“While major new energy infrastructure can take years to finance and build there are several actions that Australian governments could adopt immediately and in the medium term that would lower costs, enhance security and reduce emissions".....

“The government should take action before next summer when potential peaks in demand will arrive again.

“The Five Minute Settlement Rule has the backing of the Australian Energy Market Operator and the Australian Energy Regulator., as well as other key industry and energy experts.”

“It’s a straightforward change with wide-ranging benefits, most important of which will be create conditions to attract investment from fast responding energy technologies, such as batteries.

Read the full explanation here.
Australia Institute:
http://www.tai.org.au/node/3583

[monotonehell]

This is click-bait, Vee!

What do you mean I have to READ the article?!

[Vee]

Not intended. Too long to post full item here and mindful of copyright issues.
Yes, Read More - IF interested in the 5-Minute Rule.

It's easier to re-post articles from open sites eg ABC News, but copyright restrictions and password protections limit others.
Short excerpts with acknowledgment and link usually OK and S-A is not a commercial site.
This info was available in the Australian Financial Review but this is a subscriber site.

[ChillyPhilly]

The latest:

Basically AEMO has a bit more power (no pun intended) in September 28-level events.

http://www.aemc.gov.au/Rule-Changes/Eme ... sheet.aspx