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AEMO confirms that AGL’s plan for Liddell will eliminate energy shortfall

In an interview with 2GB on Monday, Chairman of the Backbench Environment and Energy Committee and spokeperson for the Monash Forum, Craig Kelly, said “There is a clear argument under our existing competition law that AGL would be engaging in a misuse of their market power by closing Liddell down and not offering it to a competitor.”

On his facebook page, Kelly adds “As the ACCC have confirmed, the closure of Liddell will harm consumers and electric prices will rise.”

To make these statements, Kelly either has the hide of a rhinoceros or the memory of a goldfish.

Up until 2014, the Liddell power station was owned by the NSW government.  When the Liberals chose to give it to AGL effectively for free as part of a $1.5 billion package deal for Liddell and Bayswater (and a guarantee of coal at ridiculously low prices), the ACCC blocked the sale because it “would substantially lessen competition by strengthening the oligopoly of AGL, Origin Energy and Energy Australia.”

The NSW government appealed the decision which was overturned by the Australian Competition Tribunal who said the benefits of the sale to the NSW budget offset the risk of reduced competition.

Furthermore, in September last year, Rod Simms, the head of the ACCC, specifically quashed accusations from government MPs that AGL is misusing its market power by refusing to sell the Liddell power station to a rival saying it was not a breach of competition laws.

Not only is AGL currently making a significant profit from Liddell, they presented the government with their plans to meet future energy demand which included a mix of gas, renewables, storage and demand response, as well as an already promised upgrade of Bayswater.

In March 2018, the Australian Energy Market Operator (AEMO) sent Energy Minister Josh Frydenberg their assessment of whether AGL’s plan would meet our future energy needs.

AEMO’s analysis shows that an additional 850 MWs of resource capability are required to ensure reliability in NSW following the closure of Liddell.  If all three stages of the AGL plan are completed, the resource gap will be eliminated.

In its current state, Liddell is more likely to be the cause of a power emergency because of what AEMO describes as the potential for ageing coal generators to fail in the heat – during the 2016-17 summer heatwave, Liddell was missing 1,000MW of its capacity due to problems with boiler tube leaks.

Estimates of how much it would cost a buyer to upgrade the decrepit Liddell to keep it running for another 5 years vary between $500 million and a $1 billion.  On top of the refurbishments, when eventually closed, there are also the rehabilitation costs – AGL recently estimated these at a total of $898 million, for both Liddell and Bayswater.

Why would AGL sell an asset that is making a significant profit with a favourable contract for the next four years and risk losing customers to a competitor before they have had a chance to develop their alternatives?

Why would a buyer purchase an unreliable plant that requires major repair for a short life extension which will be followed by significant clean-up costs?

As AGL already own the site and have said they can use some of the existing infrastructure, possibly even existing quarries for pumped hydro storage, their proposal should be much cheaper meaning less cost passed on to the consumer.

The government says it wants affordability, reliability and, as an afterthought these days, lower emissions – then why this ridiculous posturing about Liddell?

Encourage AGL to get on with their plans for their own business and start concentrating on some sort of coherent energy plan that businesses can rely on.  They all know that there must be a low carbon future but are unwilling to invest due to the hopeless inability of the government to settle on a plan that acknowledges that.


12 comments

  1. ajogrady

    What is going on? The L/NP in support of socialism,not letting the free market reign, countermanding shareholders rights and in particular recognising the repercussions of privatisation that they now acknowledge as a public owned utility.

  2. New England Cocky

    There appears to be little doubt that Turdball is grasping at straws while claiming to be the greatest planner for electrical power supply in existence. it is totally scandalous that the NSW NLP misgovernment sold off Liddell under such advantageous conditions to the purchaser. Similarly there is no doubt that the Gladly Back-flip-I-can NLP misgovernment has absolutely no understanding of buying and selling assets to benefit the electorate rather than their corporate mates and financial patrons.

    Verily it must beside that another tear of this self-serving, self -indulgent misgovernment will completely destroy any semblance of public infrastructure assets in the state of NSW.

  3. Kaye Lee

    The Baird government in NSW sold a 99-year lease on the Port of Newcastle – the world’s largest coal port – to Hastings Funds Management and China Merchants group for $1.75 billion in 2014.

    In 2015, the new owners hiked the fees the port charges coal exporters like Glencore and BHP Billiton by 40-60 per cent, and promptly wrote up its value to $2.4 billion.

    http://www.afr.com/business/transport/why-accc–boss-rod-sims-lost-it-with-privatisation-20160727-gqenbb

  4. jimhaz

    Where do we get the energy from while the extensive and difficult refurbishment is occurring? Do we buy it at inflated costs from other states?

    I’d make a guess that a refurbishment would take 3 times longer to put in place than AGL doing renewables.

  5. Henry Rodrigues

    AGL has been in the energy business, producing transmitting and selling, for more than 150 years. On the other side, you’ve got Mike Baird, Gladyis Berejiklian and Turdball, who are full time professional politicians and all time idiots, where energy is concerned.

    Who would I rather trust ???? Need one ask???

  6. Kaye Lee

    In 2007, a project commenced at Liddell to replace some of the station’s boiler feed-water by hot water from a solar thermal array. As of March 2007, the project was at a second-stage prototype but had not been connected to the power station. Subsequently the 9 MW solar section was added to the Liddell coal-fired generator, but has now effectively been closed. Analysts say the incentive to use the solar boost was reduced by the removal of the carbon price and excess coal supply.

  7. Harry

    The only reason the COALition is fighting AGL over Liddell is that coal has a declining role in its plans. Can’t have that!

  8. diannaart

    AGL had the temerity to mention “renewables” and the LNP freaked out.

    Instead of providing leadership towards a sustainably powered future, setting strategies for workers and industries as old energy plants go off line, encouraging investment into new sustainable technology, the LNP are set on throwing stumbling blocks for every incremental progressive step.

    This is why our energy bills have rocketed.

    While it is reasonable to expect a price increase during a change of technology, the LNP are exacerbating a transition instead of providing stability and assistance.

    Unbelievable.

  9. Pete Petrass

    All the blustering by the Lieberals is merely a distraction so the MSM will paint them in a good light (as per usual) in the run to the next election. In other words they are already in election mode. The MSM will try to have us believe the Lieberals are the good guys just trying to make everything good for all Australians but are being held back by the bad guys like the ALP, Greens, AGL, etc.

  10. Kaye Lee

    I get polled often. I was polled over the weekend and again just now.

    They asked a question along the lines of “works in the best interests of the country” then asked if that applied to Turnbull and then if it applied to Shorten. The interesting part was, with Turnbull, they started press 1 for strongly agree whereas with Shorten, they started with press 1 for strongly disagree. When they asked about company tax cuts, they didn’t just say do you agree with company tax cuts…the question was along the lines of do you agree with the company tax cuts proposed by the Liberal party to make Australia more competitive, attract investment, create jobs and higher wages.

    I feel a victim of manipulation but it’s hard to express anger to a recording. It was a real person on the weekend and he ended up laughing at my free responses – much more satisfying to say what you really think.

  11. diannaart

    Kaye Lee

    I like to guesstimate the instigator of robo-calls – whether the sequence, type of questions and such indicates LNP or Labor. Its entertaining up until the questioning is so biased I can’t give an honest response and I hang up.

    Lucky you getting a real live person on the weekend … is there an election coming on?

  12. Zathras

    There’s a certain irony about the notion of the government buying back Liddell considering the Baird State Government effectively “gave it away” as part of the 2014 privatisation deal that included Bayswater.

    Liddell was effectively valued at zero dollars by AGL and was scheduled to shut down in 2017 when the Tomago smelter was to be closed.

    At the time they insisted that privatisation would lead to a more reliable, efficient and cheaper electricity supply for consumers.

    It’s a lot like selling Telstra when it would have been the ideal provider of the NBN.

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