Via The Australian through gritted teeth:
The use of high-cost gas for electricity generation has almost doubled in two years, producing a perfect storm for household bills of record gas prices and a growing reliance on it to fill the energy gaps as coal plants come off line.
The Australian understands that modelling provided to the Turnbull government has warned that when gas is used, the wholesale price of electricity spikes from $70 a megawatt to upwards of $120 a megawatt, a cost that is ultimately passed on to consumers.
At the same time, the reliance on gas, according to the data, has jumped from 13 per cent in 2015 to 23 per cent this year, contributing in large part to the recent increase in retail power bills of 20 per cent.
The gas shock has effectively wiped any gains for consumers, after energy bills levelled off in 2014 and started to fall in 2015 when state-imposed network costs began to ease and the carbon tax was removed.
Updated Australian Bureau of Statistics figures supplied to The Australian show electricity prices per household rising on average by 10 per cent every year between 2009 and 2013. They then fell by 5 per cent from 2014 to 2015.
In a detailed briefing to the Coalition partyroom last week, Energy Minister Josh Frydenberg warned that the wholesale electricity pricing crisis of the past two years was being largely set by gas, which was relied on more often and at higher prices than coal.
Australian Energy Market Operator modelling shows that for every $1 rise in the price of a gigajoule of gas, there was a corresponding $10 a megawatt rise in the wholesale electricity price.
Bloody Hell. Hooray! And Labor is onto it at the AFR:
Labor leader Bill Shorten will ramp up his campaign for the greater use of gas to generate baseload electricity as he counters the Turnbull government’s preference to prolong the life of old coal-fired power stations.
Mr Shorten, who has already demanded the government use its new powers to secure more gas for domestic use, will call on Wednesday for additional measures to increase the supply and lower the price of the fuel for industrial users.
He said while pulling the trigger to force exporters to free more gas for domestic use would increase supply and reduce price, more was needed to help manufacturers secure affordable long-term contracts.
Mr Shorten will suggest that gas market transparency measures as recommended by the Australian Energy Market Operator be urgently fast-tracked.
…Just over a year ago, the Turnbull government said gas would be the prime source of baseload power as the nation transitioned towards renewable energy. But earlier this year it switched, and re-embraced coal.
“This is a crisis happening right now. Australian manufacturers need action on it right now, not in five years’ time,” [Shorten] said.
“The energy crisis we’re facing right now is bigger than one power plant, it’s a national problem that demands a national solution.
“We are in the midst of an energy crisis and it’s mind-boggling the Turnbull Government is refusing to pull the gas export control trigger. His own regulations say this should’ve been done by 1 September.”
The reservation mechanism is not strong enough and needs to be beefed up. Moreover, there is a much more than reasonable argument to be made that the gas market has completely failed and requires comprehensive government intervention to fix it. Japan and now India are both paying half what we pay for our own gas.
Remember that Australia’s domestic shortage is only about 200Pj of the planned 4200Pj of exports per annum. 4% for crying out loud. Yet we’re busy attacking power generators, dismantling decarbonisation, mulling coal subsidies, launching Snowy white elephants, exploring solutions for ten years hence when all we need to do is flick the switch to reserve a tiny bit of our own gas for ourselves today.
How did we get so lost? This guy:
Tony Abbott has sent a warning to Malcolm Turnbull that he will cross the floor of parliament and vote against any government attempt to legislate a clean energy target, in a move that threatens to increase divisions in the Coalition partyroom over energy policy.
The threat came as the Prime Minister yesterday blamed Mr Abbott for subsidies flowing to energy companies under the Renewable Energy Target being “too generous”.
In an escalation of the backbench-led campaign to kill off plans for a CET, Mr Abbott this week relayed his staunch opposition to a senior member of the government, saying he could not in good conscience vote for a policy that continued to subsidise renewable energy sources.
Mr Abbott would likely be followed by as many as six backbench colleagues, with several telling The Australian they would be compelled either to abstain or to vote against the government on the issue.
If Labor has any sense it will go all-in on the gas solution. All-in.
