Energy security target questioned


The State Liberals have released submissions made to the Weatherill Government from Nystar, AGL, Momentum Energy and Alinta pouring cold water on Labor’s claim its Energy Security Target (EST) will drive down the price of wholesale electricity.

Treasurer Tom Koutsantonis: ‘The EST is set to commence on 1 July this year at the target level of 4,500 gigawatt hours of generation, rising by about a third by 2025 to 6,000 gigawatt hours. Frontier Economics modelling shows that this scheme will result in lower wholesale electricity prices due to the increase in competition from local dispatchable generation.’ (Hansard, 10 May 2017)

Nystar: ‘While the intent of the scheme is to lower wholesale prices, given the generation market structure and in particular the high concentration of generation in South Australia and the high underlying cost of the predominant fuel (gas) it is debatable whether the scheme will be effective at reducing wholesale pricing due to these factors.’ (19 May 2017)

Momentum Energy: ‘As outlined above, Momentum has concerns that commencing the Target at this stage is unlikely to have any downward pressure on prices, and will instead become a pure passthrough to customers.’ (26 May 2017)

AGL: ‘We remain concerned however that as the scheme aims to replace imported electricity with locally generated power, the desired effect of lowering wholesale prices may not be achieved.’ (26 May 2017)

“This is further evidence that the Weatherill Government’s chaotic energy plan was conceived in panic and delivered without detailed analysis of its impacts,” said Shadow Minister for Energy Dan van Holst Pellekaan.

“Once again the Weatherill Government has been exposed as overselling the benefits of its chaotic $550 million energy plan.

“It’s little wonder the Weatherill Government has pushed back the start date of its EST to the beginning of next year.

“The Weatherill Government must conduct independent economic modelling of the impact of its EST before inflicting even further pain on long suffering South Australian businesses.”