Queensland power prices set to rise again with Callide to remain offline until mid-2024
One of Queenslanders biggest power generators will remain offline until summer next year in what could provide a catastrophic blow to the cost of living crisis.
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Queenslanders will need to brace for already sky-high power prices to keep rising, with one of the state's biggest power generators remaining offline for longer.
CS Energy announced on Tuesday that its Callide C3 and C4 coal-fired power generators would not be back online before the peak summer period starts.
It follows the explosion of the C4 unit in May 2021, which sparked unprecedented wholesale power prices and contributed to the an unprecedented shutdown of the electricity market in June 2022.
Callide C3 was due back online from September, but is now not expected to be fully operational until February 18 next year, though will be at 50 per cent capacity from January 7.
Callide C4 was due to return to operations in stages from October 31 this year, but this is being pushed back to being at half capacity by May 19, 2024 and full-capacity by July 6.
CS Energy acting Acting CEO Andrew Varvari said the revised program of works followed advice from independents experts E3 Advisory conducting a review.
He said the new schedule was required to factor in the complexity of rebuilding the cooling towers, risks of supply chain issues and the recommissioning of the C4 generator and turbine.
“The demolition and rebuild of the C3 and C4 cooling towers, and the subsequent recommissioning of the units is a highly complex project, further complicated by our JV partner being in an Administration process,” Mr Varvari said.
“Work started on site earlier this month to demolish the C3 cooling tower, with nine cells demolished to date, and this will be followed by the demolition of the C4 cooling tower.
“We have completed the bulk of the rebuild works on Unit C4 following the incident in May 2021 and introduced improvements to make the site safer.”
Deputy Premier Steven Miles said wholesale power prices will go up as a result of the delays at Callide but insisted it was too early to say if that increase will flow through to retail prices for household bills.
The $500 power bill rebate in the federal budget has already been chipped away by an increase looming for household power bills of nearly $350, as flagged last week by the Australian Energy Regulator.
Mr Miles said “potentially over time” retail prices would rise as a result of the delays at Callide but dismissed this concern as a guaranteed flow-on effect.
“It’s not as simple as taking the wholesale power prices and assuming that will flow through as a direct increase in retail power prices,” he told reporters.
“The relationship is much more complicated than that but we do know power prices, both wholesale and retail, have been increasing and that’s putting pressure on households.
“The delay will increase wholesale power prices but there is not a direct link between wholesale prices and retail prices that households will pay.
“They’re calculated across longer term contracts so it’s harder to draw a direct correlation.”
The Deputy Premier said the state government was disappointed about the flagged delays to the sections of power station returning to service, about two years after the fire at the Central Queensland facility.
“This is not the result we wanted,” Mr Miles said.
“We were very clear to CS Energy that they would absolutely prioritise getting C Three and C Four online as quickly as they could and it’s disappointing that this project has now been pushed back.
“We’ll do everything that we can to ensure that all of the other generation capacity that we have is delivered.”
Last December Auditor-General Brendan Worrall detailed in his audit of the state’s energy sector the incident at Callide C had impacted energy prices.
His report found weekly average prices in Queensland for 2021-22 were higher than in the previous year.
“An incident at Callide C in May 2021 resulted in a generational unit being withdrawn from the market,” the report found.
“This contributed to higher prices until mid-July 2021.”
But at an August’s 2021 budget estimates hearing Energy Minister Mick de Brenni said the outage “would have no net impact on consumers electricity prices”.
Mr de Brenni on Tuesday said “while CS Energy management has addressed the reasons for this, I remain incredibly frustrated by this delay”.
“While I’m not happy with the situation, I am advised the system remains forecast to maintain adequacy of supply,” he said.
“The operational matters relating to the return to service of the Callide units should be addressed by CS Energy.”
The LNP has slammed the state government for “failing to maintain” the Callide generators, and said restoring them must be a priority to keep prices down.
“If these generators are offline for another twelve months, how much more will Queenslanders be paying to keep the lights on?” LNP energy spokesman Pat Weir said.
“For two years has Palaszczuk Labor Government has allowed these generators to sit idle, after failing to maintain them, knowing their failure to act would hit Queenslanders in the hip pocket.
“It’s little surprise Queenslanders are seeing their electricity bills skyrocket as a result.”
Opposition Treasury spokesman David Janetzi said Queesnalnders would be paying more every day the generators were offline.
“Families are cutting back on costs, they are making the difficult decision about whether to pay their power bill or put food on the table,” he said.
“In a cost-of-living crisis, governments should be easing pressure on cost of living, not making it more difficult for Queensland families to make ends meet.
As well as Russia’s invasion of Ukraine, the Australian Energy Regulator has pointed to troubles with the ageing fleet of coal-fired power stations as pushing up power prices.
The lack of generation can increase wholesale prices, which do not automatically flow on to retail prices paid by residential customers, but do have an impact if they remain elevated for longer periods of time.
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