Note: This is an edited version of an opinion piece submitted to some regional newspapers in NSW.
An unsettling situation is developing on energy supply in South Australia, and it is hurting business and consumers and making Government MPs very uneasy.
Electricity prices are spiking dramatically – and a growing number of South Australians are blaming the taxpayer subsidies the Government has pumped into wind power, which has forced coal and gas-fired generators out of business.
The question reportedly on the lips of angry businesses as they confronted the Government this past week was ‘You have created this situation – now what are you going to do to fix it?’
The Government response was to blame the National Energy Market and put out an urgent request to the owner of the Pelican Point gas-fired power generator to restart a dormant turbine and get additional power into the grid.
The call on the owners of Pelican Point follows less than two months after AGL reversed plans to mothball its gas-fired Torrens Island Power Station, also in SA, choosing instead to keep supply in the market to address what the company referred to at the time as a ‘significant tightening of supply’.
So while there were a number of factors at play in the recent price spikes in SA, not least of which was the sustained cold weather and subsequent jump in demand for heating, it was apparent to the industry before the cold snap that things were getting tight in SA on the supply side.
Why this should be of concern to people in NSW and Victoria is that energy companies, including gas producers, have been predicting a tightening of natural gas supply in the nation’s south-east for the past few years.
Unions and manufacturing industry representatives have been echoing the energy industry warnings, saying tens of thousands of jobs and thousands of small businesses are at risk in the not too distant future.
They are worried about price spikes and/or shortages putting unbearable pressure on industry and small business. There are also 5 million residential gas users in the south-east who may also have something to say if prices go up as they have in SA or there is the threat of shortages.
As the SA Government call to Pelican Point has shown, the nation needs gas. It needs more of it – to provide essential back-up to renewable energy for when the wind is not blowing and the sun is not shining; and to provide the essential feed stock and fuel for Australian manufacturing, small business and residential users.
Resources need to be developed to replace the declining reserves of Bass Strait gas, on which Victoria and NSW largely rely, as they have done for the past 40 years.
Narrabri and surrounding towns are lucky in that they have a major natural gas resource beneath them, and a resident proposed developer, Santos, willing to guarantee local supply – which would effectively quarantine the area from any shortage in southern NSW or Victoria.
However, this comforting reassurance for local communities is dependant on the necessary approvals being granted – and the Santos project proceeding.
Without it, NSW faces the imminent run-down of its only current alternative local supply, AGL’s Camden Gas Project, which has safely and efficiently produced about 5% of the State’s gas needs over the past decade.
Because of anti-fossil fuel activist resistance, AGL has been unable to expand the Camden plant into areas which had been part of its planned growth into adjacent areas for many years.
Without a shred of evidence of any environmental harm activists have frightened the local community and their elected representatives to resist the expansion of the operation to extend its productive life.
The result of this is a clear negative for New South Wales. It would be a major blow if anything similar happened at Narrabri.