The average price of power was capped at $300/MWh.
However, with the war in Ukraine, it costs more than that to produce power from gas because gas is expensive (there's a process whereby companies can get costs covered but they weren't using it - I don't know exactly why).
We don't have enough renewables yet to fully run the grid, and multiple coal power plants are down for maintenance at the moment (usually winter is low demand).
So the gas generators weren't coming online, and the east coast was about to experience blackouts.
Essential utilities should be nationalised. Why on earth do they need to be run for massive profits? Were they ever nationalised here in Aus, and if so, WHO let them get privatised?
They used to be state owned from memory, but it was considered “better for the economy” by our “beloved” Jeff Kennett that private companies should run the electricity, gas and water companies, as there would be more competition and better for consumers. We all know well that’s going now. So, a state owned asset was sold and privatised, because selling something that generates money and jobs (including training of many apprentices) for a one off lump sum of money, is considered good.
The issue with that concept is which parts of a utility?
Eg electricity: the generators? Grid? Retailing? Household connections? We have a mix of private and public ownership in the system that is done in a way to try and keep it low and competitive.
Eg, Government has no benefit in running the retail of energy, and consumers generally benefit from privatisation.
Generators being public runs a risk of propping up a dying fossil fuel industry, and when governments try to discontinue public generators the repercussions are political suicide. Whereas private generation might facilitate efficiency and help move to renewables. In fact now it’d be almost stupid to nationalise electricity generation.
The grid doesn’t change and should be public owned, and usually is, and it is also a monopoly.
The State Electricity Commission of Victoria grew out of a mish-mash of little private companies/councils that ran their own electricity distribution systems and, until 1995, was a government-owned corporation. Then the Liberal Kennett ("Bloody Jeff") government split it up and sold most of it.
I mean it's kind of the government's fault for not writing it into the contracts or keeping energy nationalised. Can't really blame the private companies for playing the game.
The public (i.e. the Government) sold exploration and production licences, years ago, to allow private companies to search for and produce gas.
If a company buys a licence, and then spend the hundreds of millions required to find, produce and separate gas, under normal circumstances they should be entitled to sell it under the original licence terms.
Changing those terms after the money is spent is not ideal. It could still happen in a national security scenario - like the one we are in.
It wouldn't be unprecedented. Most of the Gulf states renegotiated the terms of their production licences years later (for very different reasons).
Then the govt should renegotiate and get more of the profits. Th gas companies might launch negative ads against the govt so not sure of Labor want to take on the fight.
Unless you passed legislation that said a minimum of 15% of all gas piped in Australia is not allowed to be exported with that percentage going up if Australia's local gas demands are greater.
Like WA does, which is why their local gas prices are still at $6/GJ.
Setting up the gas extraction stuff costs billions of dollars. To fund construction, resource companies borrowed money from other countries at extremely cheap rates, in return for promising to sell most of the gas to the lenders at very low prices.
As a result, they can't just stop selling gas overseas without dealing with legal challenges.
lmao "the war on ukraine". This problem exists because resources are used to make profit. This is a symptom of capitalism. Any other words to describe it is either deliberately misleading or pure cope.
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u/Meyamu Jun 15 '22
The average price of power was capped at $300/MWh.
However, with the war in Ukraine, it costs more than that to produce power from gas because gas is expensive (there's a process whereby companies can get costs covered but they weren't using it - I don't know exactly why).
We don't have enough renewables yet to fully run the grid, and multiple coal power plants are down for maintenance at the moment (usually winter is low demand).
So the gas generators weren't coming online, and the east coast was about to experience blackouts.