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Australia: Power generator rort alleged
AUSTRALIA'S largest power generator, Macquarie Generation, has been accused of manipulating prices in the wholesale electricity market in an attempt to offset the effect of the carbon tax.
On successive days in recent trading, it has withheld some electricity supply, and this has immediately driven wholesale electricity prices higher.
The Australian Energy Regulator has noticed unusually large price rises since the introduction of the carbon tax, and is continuing to monitor the market.
Unusual pricing activity has been noticed in the Victorian and South Australian markets, along with Macquarie Generation's alleged activities in New South Wales.
According to the Australian Energy Regulator, Macquarie Generation has not been alone, with AGL boosting prices in South Australia with the ''extreme pricing'' also evident in the Victorian and Tasmanian markets.
''Since the commencement of the carbon price, spot prices in the [wholesale] market have been higher than anticipated,'' it said in a report released after the July 1 start of the carbon tax.
''This has been driven to an extent by some generators increasing their offer prices by more than would be expected following the introduction of the carbon price.''
Since then, some of the pressure has come off wholesale electricity prices, although Macquarie Generation appears to have been flexing its muscles last week.
Macquarie Generation refrained from responding to the claim, directing BusinessDay to a submission to the Australian Energy Markets Commission by the National Generators Forum, which argues the national electricity market is competitive.
''For a few days, Macquarie Generation pulled out at the peak generation time,'' said David Headingly of the Major Energy Users Group. ''It reduced output, and the price went up.
''I find it improbable generators - on consecutive days - have a technical reason for withholding capacity at a time of peak demand.''
Households are insulated from immediate movements in wholesale electricity prices, although the higher prices do push retail power prices higher as retailers pass on the impact.
Many large industrial and commercial electricity users, however, feel the impact immediately.
As one of Australia's largest carbon emitters, Macquarie Generation is faced with an annual carbon tax bill of $460 million if it maintains output at present levels.
Earlier this year, it slashed the value of its asset by more than a third, from more than $1.8 billion to $1.1 billion, by making a $700 million write-off, the first big financial hit as a result of the looming carbon tax.
The company produced 20 million tonnes of carbon dioxide in 2010-11, down from 25 million tonnes a year earlier, federal government data shows.
''We have seen some manoeuvring to test [the market], and prices may have been a little higher than would be expected,'' Ed Willett, a member of the Australian Competition and Consumer Commission, said of some of the recent price movements.
''It is too early to draw any conclusions. We will continue to monitor it.''
Mr Headingly said of the Macquarie Generation actions: ''If it looks like a duck, and sounds like a duck, then it is a duck.''
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