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sydney alternative media - non-profit community independent trustworthy
Wednesday, 7 May 2008
Energy industry whistleblower : 'evidence of a national market has largely disappeared'
Mood:  bright
Topic: nsw govt

We received this correspondence late today from an industry insider. We don't claim to have the technical ability to fully absorb this information but we include the explanation by this whistleblower, who appears to be totally contradicting Paul Keating's recent spin article in the Sydney Morning Herald about the efficacy of a national energy market, a topic of great interest to the NSW ALP caucus in their meeting yesterday 6 May 2008.

Dear [SAM editor],

I read with relish your rejoinder to Kirk McKenzie in New Matilda - well said!

There is so much bullshit written about how state ownership in NSW is keeping the price of electricity high and how a free market would bring prices down.

The attached charts plot electricity pool prices, state against state, for NSW, Victoria and Queensland.

If there really were a national market for electricity each plot would be a diagonal line through the origin with just a few excursions when there were transmission constraints between the states.  There is evidence for the operation of a national market some of the time such as in 2001, but in recent years that has largely disappeared.

It has also been claimed that NSW prices are too high compared with Victoria, ostensibly on account of the lower efficiency due to overmanning and poor work practices.  The chart give the lie to this also.  In 2006 the average pool price in NSW was $3.12 lower than in Victoria.  In 2007 it
might have been $3.67 higher in NSW than Victoria - but the average price in both states had doubled!  So much for the greater efficiency and competition in Victoria bringing down the price of electricity.  I am sure that production costs in each state didn't double overnight.

In 2006 all the generators, both state and private, were complaining that they were losing money hand over fist.  It looks to me like they finally stopped cutting each others throats with their stupid bidding behaviour and
worked out how they can all make huge profits with the right bidding strategy.

All of my data came from the NEMMCo website where it is freely available to the public; all I have done is collated it and charted one state against another with a logarithmic scale that shows the whole range of bids to finally reveal what the hell is going on.

What we have to remember too is that the average pool price will have to go $90 per MWh for wind farms to be financially viable for investors like Babcock & Brown.  That ain't gonna happen unless Babcocks et al can get
their hands on all the thermal stations in the country and push the price up by shrewd bidding practices.  Outright collusion isn't necessary, just tacit acceptance of a few simple rules that they all seem to have learned quite well during 2007.  So if we want to go green to save the planet, we have to bribe investment capital into doing it by doubling electricity prices.  And people like Bob Carr and Paul Keating are standing at the elbow of the investment houses guiding their hand.

I am happy for you to use this information anyway you want because there is nothing stopping you or anyone else from obtaining it like I did.  All I ask if you do so is to remain anonymous ......

Posted by editor at 8:40 PM NZT
Updated: Thursday, 8 May 2008 4:44 PM NZT

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