The headlines are finally catching up to MB with about an eight-month lag:
The Australian wraps it up:
“Next year using the current market prices, tariffs are going up a minimum 35 per cent,” Alinta chief executive Jeff Dimery told an energy conference in Sydney.
“It’s horrendous, it’s unpalatable. We don’t want energy consumers getting their power bills and setting fire to them.”
…“Based on current wholesale prices, those orders of magnitude sound familiar to me,” Origin CEO Frank Calabria said.
… “Just looking at the wholesale markets and buying as a retailer you’re selling retail energy, and you have to buy the energy in the wholesale market,” EnergyAustralia CEO Mark Collette said.
“Just go back a year, wholesale electricity prices are up four times from $60 per megawatt hour to $240MWh. Gas is up from $10 a gigajoule to $50 on the current ACCC netback. That’s four or five times, and it’s massive. It’s putting a lot of upward pressure on tariffs.”
…“I think we all see there are going to be big increases next year,” Momentum managing director Lisa Chiba said.
And this from the AFR:
It’s not every day that the chief executive of a major Australian energy company tells a room full of 400 people that he’s about to get a margin call from Macquarie Group.
But Alinta Energy CEO Jeff Dimery is clearly a man whose patience with the state of the Australian energy market has run out.
He’s sick of the industry’s talkfests. Sick of the inaction. Sick of being caught up by surges in wholesale electricity prices. Sick of the gyrations on futures markets; forward electricity prices for power in 2024 and 2025 jumped again on Monday morning, which will force Alinta to stump up more capital to Macquarie for collateral against his futures positions, in another blow to the Hong Kong-owned group’s liquidity.
“The market is really in trouble,” Dimery said in a fiery appearance at The Australian Financial Review Energy & Climate Summit on Monday in Sydney. “We are out of time. Time for talking is finished.”
Let’s get a few things clear.
First, it is not the closing of coal power stations that is driving up electricity prices. It is the price of gas that is to blame. And, since the Ukraine War, the price of coal as well. There is no end in sight.
The Albanese Government has allowed international coal and gas prices distorted by European shortages to filter back to Australia. It did not have to. We produce these fuels for next to nothing up the road. Breaking the link to international prices is easy. Albo could have used either domestic reservation, an export levy, or super profits taxes to do it.
But it did not have the balls:
A Labor source said Dr Chalmers was still “scarred” from the failed “super profits” mining tax in 2010 when he was a senior adviser to then treasurer Wayne Swan, and that he did not want to revisit the idea.
Second, with the wholesale electricity market currently averaging $150MWh, power prices are going to rise by two-thirds over this year and next. The energy robber barons are either being modest or not including this year’s price rises. If the price averages $240MWh then the retail price rise will be 150%.
Finally, what this reporting also makes clear is that once the energy price shock is underway, it will be ruthlessly exploited by political interests to destabilise the energy transition and its politics. Bluntly, the closure of fossil fuel power plants will be blamed for price rises.
Albo’s cowards had a once-in-a-generation chance to use the crisis of the Ukraine War to fix the energy transition forever by dislocating local gas and coal prices from international. This would hand Australia a smooth and cheap energy transition as gas supplanted coal giving firming renewables time to deploy.
Instead, Albo’s cowardice will now jeopardise the transition and, in due course, his government. It is a ship of fools with Treasurer Chicken Chalmers hiding from miners under the doona. Resources Minister Mad King captured by them. Energy Minister Bovver Bowen shitting the bed all over:
Energy Minister Chris Bowen waved that away — he’s standing by Labor’s pre-election promise to lower electricity bills by $275 by 2025.
And above them all is the 150-pound wringing wet weakling, PM Albo, who does not know how to govern outside of parameters defined by a committee.
