Report shows AGL profited from Hazelwood closure
26 Mar 2019
A report from the Victoria Energy Policy Centre, released this month, has calculated that AGL reaped an extra $832 million in gross profits (or 60 per cent higher than previous profits) from its electricity wholesale business after the closure of the Hazelwood power station as it exercised “market power” to lift electricity prices to the detriment of customers. AGL’s dominance of the electricity sector after it bought up two former NSW government coal-fired power plants allowed it to lift market-wide wholesale prices to the tune of $3 billion a year – which could be costing households about $200 each.
The generators, along with regulators and the market operator, acknowledge that wholesale power prices surged after the shutdown of 1600-megawatt Hazelwood, which removed about a quarter of Victoria’s baseload supply, but denied this was due to their “gaming” of the system.
“The wholesale energy market is regulated by the ACCC (Australian Competition and Consumer Commission) and the AER (Australian Energy Regulator), with both conducting recent lengthy reviews, which AGL has supported by providing thousands of documents,” AGL said on Monday.
“Specifically, in 2017, the AER conducted a market review into wholesale prices and requested information on the issues raised in this report. AGL fully complied with this request. Neither regulator has accused AGL of misusing market power, or behaving in a way that’s within the rules but harmful for the market.”
EnergyAustralia said manipulating wholesale electricity market prices to “gouge” custom
ers was wrong and was something that “does not happen” at the company, which owns the Yallourn brown coal generator in Victoria, as well as gas plants.
Origin Energy noted it had increased output from its Eraring coal generator in NSW to protect customers from the wholesale price shocks resulting from the “sudden” closure of the Hazelwood plant.
Federal Energy Minister Angus Taylor seized on the report on Monday, saying it revealed “price gouging of a massive scale” and added weight to demands by the Morrison government for Labor to back its “big stick” legislation aimed at curtailing the pricing power of big energy companies.
Mark Butler, Labor’s energy spokesman, said the Liberals’ “complete lack of energy policy meant that when Hazelwood closed, there was no plan for replacement generation or to support workers and the community”.
“It’s the Liberals’ inability to resolve their energy crisis, which has resulted in power prices going up, and up and up,” he said. The government’s “big stick” energy policy wasn’t “in the interest of consumers, if it was the ACCC would have recommended it in their report”.