New Zealand's second largest thermal power plant is closed for repairs amid fears of a looming winter electricity shortage.
Contact Energy's Otahuhu B thermal power station was shut on Wednesday for what is expected to be four days because of a faulty boiler tube.
The closure of the plant will place more pressure on already dwindling South Island reserves.
Forgive me. I read the true story of how Enron and others manipulated power supplies in southern California a few years ago. This inflated the price of power and delivered more profits. Among the tricks employed, plants being taken offline for repairs was a biggie.
The effect: Power shortages - real or imagined. This was no conspiracy theory. It's what they actually did.
So allow me a moment's speculation.
Here we have the only private generator, Contact, taking a very large generator offline for repairs for several days, perhaps helping ensure a very profitable shortage later in the winter and a spike in prices right now.
I know stuff needs to be fixed if it breaks. How long it stays broken and whether the whole plant needed to go offline are the sorts of things only insiders can know.
With wholesale prices already much higher than normal, choking supply can only have one effect: higher prices.
Ooops.
This will bear further watching.
When it comes to corporates and ethically dubious strategies to maximise profits, the record is now very clear: You're crazy if you're NOT paranoid.
Good evening Steve, after an initial surge in Wholesale prices the spot price and wholesale price settled back to where they were prior to Contacts announcement of a 4 day shutdown of Otahuhu B.
ReplyDeleteThe fundamental problem is that we have not built enough new supply and the infrastructure has not kept pace with demand. When coupled with one of the two cook strait cables being chooked we are at risk of planned staggered brown outs within one month.
As you probably know a brown out will be in the form of the ripple connections for hot water being switched off for extended periods.
This situation has arisen for a number of reasons in my opinion.
Firstly,
the quasi privatisation removed central control and planning,
Secondly,
even though most of the industry is still govt controlled there does not appear to be any motivation for a social dividend with the SOE's. So we have no new capacity being built and the govt sucking all the profits out.
Thirdly, the govt is taking 10 bucks a week per household in dividends from the SOE's. This money should have been used to build new power stations.
My solution. Build another massive power station where the coal is.. Huntly.
Immediately replace the cook strait cable..
National interest provision to be placed within the RMA to stop the nimby's holding us all to ransom. The we can build more hydro in the SI.
And lastly, cap SOE power prices for 10 years. This last one rubs the wrong way for me personally because I am very opposed to the way the govt has stripped shareholder wealth in Telecom and AIA through dogma driven decision making, so we may need to buy contact back first as any govt price freeze will effect contacts owners unfairly.
Bill: Broadly, your strategy is not bad one and I agree that central control of this piece of infrastructure is very likely the best way to go.
ReplyDeleteSixteen years have passed since the last time the lakes were this low and not enough was done. That says to me that the market model for this type of system doesn't work. I say that because the SOEs do operate on a commercial basis, like any private company would.
Much cheaper and easier on the environment is conservation. There is one major item we could have been doing for the past 16 years and saved - by now - power each day equivalent to several Proect Aquas.
Passive solar water heating. It's that simple.
I blogged on this earlier today. Check it out.
Oops. Sorry Bill. Was logged into my other account. No blog associated with that one.
ReplyDeleteI read your earlier post and agree.
ReplyDeleteThat said the current govt scheme has been a monumental waste of money.
I am at heart a free marketeer who does not believe the big govt ethos works. However in something so fundamentally important as electricity we do need central planning, If this can be done without creating another massive ministry full of time serving numpties I would support it. We have solar and I try and live as environmentally friendly as possible (with the exception of the vulgar collection of gas guzzling cars). I don't do this because it is trendy or "good for the planet" it is simply the right thing to do and saves money.
The 10 bucks a week per household that cullen has spent like a drunken sailor on shore leave could have funded a subsidised solar roll out around the country. AND STILL COULD.