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South Australia: power prices escalating

In international news, according to a Melbourne Energy Institute (MEI) report South Australia’s power prices have been artificially inflated by the state’s oligopoly electricity generators.

The recently published report claims to have found ‘demonstrable evidence’, which indicates that power tariffs that have been witnessed in South Australia have been exaggerated, reports Renew Economy.

MEI states that concerns about the exercise of market power in South Australia had been evident in relatively low levels of liquidity.

South Australia’s power prices benefiting generators

The analysis, commissioned by the Australian Conservation Foundation, argues that there is ‘demonstrable evidence’ of the extraction of what it calls monopoly rents by some generators, arguably through withholding of capacity.

According to the report, generators do this by choosing not to generate electricity for a period in order to push up prices and then boosting the output to get higher rates.

Furthermore, the study claims to have identified 41 occasions where this practice occurred at a single South Australia power station in 2015.

“By carefully choosing when to supply electricity to the grid and when to withhold supply, the generators are making a fortune,” the report stated.

Electricity generators

The MEI report further claims to have found that since mid-June 2016, South Australia’s electricity generators made between $40 million and $60 million by restricting supply to raise prices, without fear of competition from rivals.

The findings are reported to have come in the wake of an ‘energy crisis’ in the state, which saw the average margin for electricity supplied to the grid go from $18.74 per MWh in mid-June to $70 per MWh.

It is reported that South Australia’s energy minister, Tom Koutsantonis, has requested competition authorities to look into the matter.

The Australian Energy Regulator is also conducting regular reports, but is yet to reveal its investigations into the biggest price spikes from last month, the media reported.

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.