The Perfect Storm: Analysing the Role of Gas in South Australia’s Power Prices

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The Perfect Storm: Analysing the Role of Gas in South Australia’s Power Prices

The Climate Council has recently released a report into South Australian power companies’ high returns despite consumer gas prices being extremely high over July of this year. The Report found a number of factors converged over this period to produce a point of extreme prices during the winter peak where gas usage is notoriously high. Some of these factors included:

  • Power companies selling domestic gas at comparable prices to international export gas
  • The concentration of energy supply (80%) to the duopoly of AGL and Origin Energy due to the interconnector transmission line outage with Victoria

Consequently, South Australian gas companies earnt $178 million during the July period. The increase in the cost of gas was largely neglected by mainstream media due to a focus on renewable energy development. The report suggests rather than increases sources of gas, the State would benefit from a diversification of energy sources and better linkages with other States’ energy capacities to increase market competition and lower gas prices. The report called for regulatory scrutiny and reform of the gas market in South Australia.

The report in full can be read here.

 

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