Gas directly responsible for power price spikes

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Here it is from the ACCC:

Importantly, the ACCC isolated gas prices as a very particular influencer of power bills.

“Another major factor in wholesale prices has been the significant shortages in competitively priced gas at a time when gas-powered generation would often be the logical source of replacement for lost coal-fired capacity. Gas prices have doubled or tripled in recent years.

“We estimate that for every $1/GJ (gigajoule) rise in gas prices, the wholesale price of electricity rises by up to $11/MWh (Megawatt hour), depending on regional differences in the NEM (National Electricity Market). Encouraging increased supply of competitively priced gas is crucial to moderating electricity prices. The ACCC’s gas inquiry is continuing efforts to this end.”

That accounts for the entire east coast electricity price spike. All of it.

Gas reservation now.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.