THE NSW Government plans to place the state’s electricity generators on the open market may have struck a hurdle with potential bidders after an announcement last week that one of the two units at Wallerawang power station will be mothballed for at least 12 months because of dwindling demand.
And the Gillard government’s carbon tax is seen as part of the dilemma.
The shock announcement is also a blow to Lithgow Council’s hopes that the government would proceed with earlier proposals for a duplication of the Mt Piper power station.
Delta Electricity is in what is termed a Gentrader arrangement with Energy Australia in the operation of Wallerawang power station.
Yesterday Delta staff were advised that Energy Australia would be removing a unit at Wallerawang power station from service, apparently as its generating capacity is not required at present in an over supplied market.
The unit is to be taken off line in mid January and is expected to remain mothballed for the remainder of the calendar year.
Energy Australia has also taken a unit at the Yallourn power station in Victoria out of service.
The organisation says the action has been influenced by falling demand for electricity right across the national energy market.
And it says this can be partly blamed on the carbon tax and subsequent higher retail prices for electricity which came into effect in 2012.
Another factor according to Energy Australia is the increasing inroads from subsidised sources of renewables.
But disturbingly it was also claimed that demand for electricity right across the national market was being affected by the closure of manufacturing facilities in every state.
Capacity has continued to exceed demand despite Delta Electricity shutting down its older Munmorah power station in the middle of last year.
According to Energy Australia the over supply has meant that pool prices have been averaging less than $50 per megawatt hour which is ‘unsustainable in the high carbon cost environment’.
Read what Delta’s Corporate Secretary Ray Madden has to say about the situation.