Lot of doom and gloom on this thread which originated from 2002....
AFR article on the $3bn subsidy about to be handed out.
The price caps will reduce electricity price rises by 20% from >60% to 40% between 2022 and 2024.
Just to reiterate the prices will be higher by 40% over 2 years!
That in itself is a call out the government has done too little too late and will now need to subsidize aggressively low to medium income households.
The damage done by this government to gas supply and investment will take a long time to sort out which in turn make Australia more addicted to fossil fuels - in this case subsidized coal and subsidized gas.
As the saying goes: what is good for oil is cheap oil.. the same can be said for coal and gas...
AGL continues to have the lowest cost fleet in the entire NEM backed up with the cheapest Fuel supply contracts in addition, its has significant flexibility (stockpiling) and has plants close to main haulage lines. Eraring for example needs to truck coal in as its coal producer is having production issues...
Once AGL's legacy hedges roll off / and retail prices increase, it will start producing >$1bn profits p.a again as it did when Hazelwood was closed.
When u turn off a 1.5GW plant overnight you will shock prices at the extremes - something that has not been factored at all in forward pricing... this will feed into the 2025-26 price setting ... ie add another min 20% to the price increase in fy25 vs fy24
Already there is a huge divide in overnight pricing between North and South - particularly when the wind blows... can you imagine what happens when 1.5GW leaves the system? (see second photo)
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