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Manifestation

April 20th, 2004

I’ll be in Adelaide tonight, talking at the Elder Hall, University of Adelaide, 6;00pm to 8:00pm in a forum organised by the Don Dunstan foundation on ‘The Electricity Crisis: What Can be Done?’

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  1. Christopher
    April 20th, 2004 at 16:12 | #1

    Wondering what your take on the SA issues are?

    That the wholesale market is or isn’t working? (is there a problem with generation investment in SA – doesn’t look like it)

    That market power is still being exercised in SA (I had to laugh when ETSA stated that the shutdown at Pelican Point on March 8 after the Vic-SA interconnect shutdown leading to record prices, was ‘a very interesting coincidence’. It’s alway’s interesting to see one part of the supply industry querying the behvaiour of other parts)

    That, given the current state of technology, retail competition in electricity is not a good idea? (Something the Qlder’s recognised)

    That the idea of competing paradigms in investment in interconnectors (market driven vs regulated) was a dubious idea to start with, and that it’s impementation only ensured that economically sensible investment would be delayed by litigation?

    That the SA regulator has an interesting idea about what constitutes competition? In December last year, in response to increases in the levels for maximum retail prices in Victoria he stated “the move confirmed the Victorian Government was committed to encouraging competition by ensuring that retailer profit margins were maintained and I would be surprised if we were to come to a significantly different position”

    Or that the high end-user prices (relative to the rest of Australia) might have been a function of earlier govt decisions to tax South Australians by seeking high prices for the sale of privatised assets via restricting new and/or interstate supplies of electricity?

    Overall, it’s hard to argue with competition in generation – experience to date around the world suggests that markets do deliver investment in capacity (amongst a myriad of market designs attempting to identify the ‘optimal’ level of installed capacity).

    The experiment with market interconnectors does not look successful – the economics for extending parts of an asset that overall is a natural monopoly is very uncertain, and the philosophy that markets can deliver in such a circumstance seems to have failed to live up to expectations. I believe that revenues for TransEnergie have been insufficient to have recovered their costs on either of the investments (DirectLink and MurrayLink). And TransEnergie have indicated they are now selling their assets.

    Perhaps it may be that although the arrangements regarding interconnectors should probably be changed, the arduous process will be secondary to the absence of new ‘market’ driven transmission investment?

    And unfortunately, only a long period of time will allow competition at the retail level in SA to bring end-user prices more into line with retail margins elsewhere in the NEM.

    cheers,
    Christopher

  2. Ric Simes
    April 21st, 2004 at 11:52 | #2

    John

    Did you prepare any written comments for this? If so, I’d love to see them.

  3. Keith Horsley
    April 23rd, 2004 at 11:22 | #3

    I too would like to see anything you have written on this.

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