Warning: Closure of Hazelwood coal-fired power station could send SA electricity prices up by 10 per cent
UPDATED: A major Victorian coal-fired power station will close next year, which is likely to increase already skyrocketing SA electricity bills by a further 10 per cent or more.
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A MAJOR Victorian coal-fired power station will close next year, which is likely to increase already skyrocketing SA electricity bills by a further 10 per cent or more.
The warning comes on top of the July price crisis that pushed many of the state’s biggest private sector employers to the brink of shutdown and the statewide blackout in September that undermined investor confidence in the state and raised fears unemployment will rise further.
On Thursday, it was confirmed that French energy company Engie would close Hazelwood, Australia’s dirtiest power station, in Victoria’s Latrobe Valley.
It is understood workers were told the plant will fully shut on March 31 and there will not be a staged shutdown.
It’s also understood Hazelwood owners Engie and Mitsui & Co will announce it will sell another Latrobe Valley power station, Loy Yang B.
Frontier Economics managing director Danny Price estimates Hazelwood’s closure could result in Victorian power prices increasing by up to 25 per cent as supply and competition fell.
Grattan Institute energy program director Tony Wood said there would be significant flow-on effects for SA, given it was so reliant on Victoria and not connected to any other states.
There could be further SA price rises of 10 per cent or more, Mr Wood said.
“What’s generally happening is a long-term trend to higher prices. That’s unavoidable,” he said.
The energy market is already forecasting a 50 per cent increase in SA wholesale electricity prices as of January, a charge that makes up around half of a standard bill.
If realised, that would leave SA households and businesses paying double the wholesale prices witnessed in NSW.
It can also be revealed the company is refusing to guarantee that it will then increase production from the Pelican Point gas-fired power station at Outer Harbor in SA, which it also owns.
Treasurer Tom Koutsantonis in September said closure of Hazelwood would be “good for SA” as Engie would be forced to increase Pelican Point output to meet its existing supply contracts.
He said this could help suppress rising prices and add stability to the SA power market.
In a statement to The Advertiser, an Engie spokesman said that could not be guaranteed. “The operation of Pelican Point is totally dependent on market conditions,” the spokesman said.
“It is important to remember that plant is bid into the National Electricity Market and the Australian Energy Market Operator decides on which plants are dispatched.”
Hazelwood supplies 20 per cent of Victoria’s energy, and rapid changes in the SA energy market driven by an aggressive embrace of wind mean the state is highly reliant on imports from interstate.
Deloitte Access Economics has forecast SA will be using the full capacity of the existing Heywood interconnector to Victoria for 23 hours every day by 2019.
Mr Koutsantonis said: “The future of Australia’s energy mix is one without coal. However, we need a national policy framework to make the transition to a more efficient and cleaner energy future.”