ETU Media Releases

Thousands of NSW power consumers may be forced to endure blackouts this afternoon after the national electricity market operator warned of a looming power shortage as heatwave conditions cause demand to far outstrip supply.

The Australian Energy Market Operator has issued a warning that between 3pm and 5.30pm this afternoon NSW faces a shortfall of 419 megawatts of power even after importing large amounts of electricity from neighboring Victoria and Queensland.

Unless additional generating capacity can be found, AEMO may be forced to repeat the load shedding order that saw 90,000 homes in South Australia have their power supplies cut earlier this week.

The Electrical Trades Union said the NSW Liberals and Nationals were directly responsible for this looming power crisis as a result of the privatisation of electricity generating assets in 2014.

ETU deputy secretary Dave McKinley highlighted the case of Wallerawang power station, near Lithgow, which was previously capable of producing 1,000 megawatts of baseload power but was closed down shortly after being purchased by Chinese-owned company Energy Australia.

“In 2014, the NSW Liberals and Nationals privatised our state’s publicly owned power stations,” Mr McKinley said.

“One of the first actions of these new private owners was to close Wallerawang, resulting in a substantial reduction to available electricity supplies and severely limiting the state’s ability to meet peak demand.

“If Wallerawang was still operating today, we would not be facing the load shedding and forced power blackouts that the national energy market operator is forecasting.

“The Liberals and Nationals told everyone that electricity privatisation would mean lower power prices and better services, but what we are likely to see today is the clearest possible evidence that the people of NSW were lied to.

“Electricity is an essential service, but when profit-hungry foreign investors take control of our public assets, they put their own interests ahead of the people of NSW, with consumers left to pay the price.

“South Australia is currently facing the same problem, with a lack of investment by the private sector in new base load electricity generation meaning higher prices for consumers and reduced reliability during times of high demand.

“We are now facing the potential for an east coast power crisis because privatisation has failed to deliver the promised outcomes.

“The current challenges in NSW have nothing to do with renewable energy generation and everything to do with private companies exploiting their power in a monopoly market while the people of NSW and South Australia are left to sweat it out.”



SOURCE: Australian Energy Market Operator forecast evening of 9 February - NSW 418MW undersupply or equivalent to 400,000 homes, https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard#operational-demand

The O’Farrell Government has been caught attempting to sell out the people of NSW for the sake of a quick buck, with the Australian Competition and Consumer Commission today ruling against the acquisition of publicly-owned Macquarie Generation by AGL Energy.

The Electrical Trades Union is urging Treasurer Mike Baird to stand by his statement last month that, should the ACCC reject AGL’s offer, the NSW Government would retain ownership of Macquarie Generation so that it could continue as an independent competitor in the electricity marketplace.

ETU spokesman Adam Kerslake said the ACCC’s decision confirmed the union’s view that the privatisation would have reduced competition, restricted the entry of new retailers, and led to higher power prices for the people of NSW.

“The ACCC has confirmed that the sale of Macquarie Generation to AGL is not in the best interest of NSW consumers,” Mr Kerslake said.

“It’s time for Mike Baird to stop trying to sell out the people of NSW for a quick buck and instead commit to retaining Macquarie Generation in public hands so that it can continue to provide effective competition in the sector and keep down power prices.

“If the ACCC could see this sale was bad for competition, and most of the market feedback to their enquiry opposed the deal on those same grounds, how is it possible that the Treasurer of NSW was being honest when he claimed this sale would drive down power prices.”

ACCC chairman Rod Sims mirrored the concerns of the ETU’s submission in his announcement this morning, saying that to allow the sale would have meant the three largest electricity retailers in NSW would also own up to 80 per cent of electricity generation capacity, raising barriers to the entry of other retailers are reducing competition.

Mr Kerslake said the NSW Government had completely mismanaged the sale of Macquarie Generation, owner of the Liddell and Bayswater power stations that collectively provide more than a quarter of the state’s power generation capacity.

“The community has been let down by the NSW Government, and in particular the Treasurer who oversaw this botched sale,” Mr Kerslake said.

“It’s been left to the ACCC to save the people of NSW from anti-competitive arrangement that would have reduced competition and forced up power prices.

“If the O’Farrell Government was fair dinkum about delivering the best outcome for the people of NSW they should never have tried to sell Macquarie Generation in the first place.

“Now that the ACCC has called out the NSW Treasurer on his claims that the privatisation of these publicly owned electricity generators would result in greater competition and lower prices, it’s time for Mike Baird to stand up in parliament and apologise to the people of NSW as well as aborting the planned sale of Delta Coastal.”

The Australian Competition and Consumer Commission has been urged to reject AGL Energy’s acquisition of publicly-owned Macquarie Generation over concerns the sale will remove competition, provide a barrier to new retail companies, and increase power prices for NSW consumers.

A review by the Electrical Trades Union of court-enforceable undertakings drafted by AGL — an attempt to quell the ACCC’s concerns around competition — found that the commitments will do nothing to address the loss of an existing standalone market competitor, which will be eliminated if AGL is given the green light.

The union warned the ACCC that if the sale was allowed to proceed it would result in:

  • AGL controlling 35 per cent of NSW electricity generation making it the largest electricity generation company in NSW and Australia;
  • 75 per cent of NSW generation being controlled by just three companies: AGL (35%), Origin Energy (25%) and Energy Australia (15%);
  • A barrier to entry for new market entrants in electricity generation and retailing;
  • No ongoing protections for retailers or consumers beyond 4 years under the proposed undertaking;
  • AGL being permitted to select their own “independent auditor” to police the undertaking; and
  • AGL independently being able to choose not to trade with competing retailers based on credit concerns.

“The ACCC can’t deny that if they approve AGL’s purchase of Macquarie Generation, competition will be reduced,” ETU spokesman Adam Kerslake said.

“Approving AGL’s takeover of Macquarie Generation will see a standalone competitor removed from the electricity market, which can’t be good for electricity consumers across NSW.

“It’s the ACCC’s job to ensure maximum competition exists in order to deliver the most competitive consumer pricing possible. Approving this deal would fly in the face of what the ACCC was designed to do.

“Only two weeks ago, NSW Treasurer Mike Baird said publicly that should the ACCC reject AGL’s offer then the NSW Government would retain ownership and in doing so would guarantee that Macquarie Generation would continue as an independent competitor to AGL and others.

“Given that there is a clear alternative that would ensure the highest level of competition possible, the ETU is of the opinion that the ACCC has no other option but to reject outright AGL’s acquisition of Macquarie Generation.

“The NSW Treasurer said that the privatisation of the publicly owned electricity generators would result in greater competition and lower prices, but it is now obvious from this planned sale that neither of those statements are true.

“The people of NSW have been lied to by Mike Baird and they deserve an apology.

“The general public last hope is that the ACCC make the best decision that will guarantee the highest level of competition. That decision is to reject the AGL deal.”

The Electrical Trades Union (ETU) has today made a submission to the Australian Competition and Consumer Commission (ACCC) urging the market regulator to reject AGL Energy’s acquisition of publicly owned Macquarie Generation.

The ETU is running a campaign against electricity privatisation called Stop the Sell Off where the union is backing community calls to stop further privatisation of publicly owned electricity assets.

Campaign spokesperson, Adam Kerslake said today that the ACCC has a legal and moral obligation to act in the best interest of electricity consumers and the public generally.

“People expect the competition regulator to do its job and stand up for consumers, which in the case of AGL’s bid for Macquarie Generation would be to reject the proposal outright,” said Mr Kerslake.

“The public were told in no uncertain terms that the privatisation of publicly owned electricity generators, including Macquarie Generation, would result in greater competition and reduced electricity prices.

“The truth of the matter is that any sale of Macquarie Generation to AGL will have the reverse affect that is, less competition, greater market concentration and higher electricity prices.

“If the ACCC gives the green light and permits AGL to buy Macquarie Generation, what we will see is a reduction in competition and the creation of a company that will have significant market dominance.

“The question I have is how can this be in the interest of electricity consumers and the people of NSW?

“What makes things worse is that NSW Treasurer Mike Baird has today disclosed that AGL’s bid for Macquarie Generation falls significantly short of what the company is actually worth.

“Macquarie Generation has a book value in excess of $2 billion, however AGL’s offer is $1.72 billion meaning the people of NSW will not only be left with higher electricity prices but the Treasurer will be selling a public asset for less than what it is worth.

“If the ACCC lives up to community expectations and rejects AGL’s offer, then Mike Baird must live up to his commitment that the NSW Government will maintain public ownership of Macquarie Generation.

“The Upper Hunter community has been put through the wringer too many times when it comes to the privatisation of Macquarie Generation; its time to put a stop to this privatisation madness.” Mr Kerslake said.

Publicly owned Bayswater and Liddell power generators in the Upper Hunter are nearing their privatisation death knell with final bid’s due by next Wednesday as a part of the O’Farrell Governments electricity privatisation agenda.

With only two bidders, AGL and much smaller ERM Power, the stage has been set for electricity consumers to again be the victims.

Stop the Sell Off Campaign Director, Adam Kerslake said today that a sale to either company will leave NSW electricity consumers worse off with less competition and higher prices.

“What we have is one of the largest electricity companies in the country and one of the smallest electricity companies in the country looking to buy strategically important power generators in the Upper Hunter.”

“If AGL are permitted to buy Macquarie Generation then what we will see is further market concentration which will result in less competition and higher electricity prices, exactly the opposite to what the Liberal and National Party have been peddling.” said Mr Kerslake.

“On the other hand ERM Power are so small that they will struggle to compete on the open market under the strain of massive debt which will lead not only to higher prices but also high risk exposure for the NSW public if they were to partially or completely fail.” said Mr Kerslake.

“You only need to look down the road to see what happened at Redbank, there is a big difference between being a power station owner and being a successful business.

“Meanwhile it is highly unlikely that the government will realise a decent return from the privatisation of Macquarie Generation with figures as low as $1 billion being thrown around when Macquarie Generations annual report values the business and their assets at more than $2 billion.” said Mr Kerslake.

“This is nothing more than a fire sale being driven by out of touch ideologues and merchant bankers that have vested interests and influence over the Premier and his government.”

“What is disgraceful is that the community have outright rejected electricity privatisation yet the government continue to sell the public out.

“More than 80% of the general public say that electricity should be owned by the public and run by the government to benefit everybody.”

“We are already seeing the private sector wind back generation capacity after EnergyAustralia announced that they will close the recently privatised Wallerawang power station near Lithgow.”

“And we all know what happens when there is a supply shortage – prices go up and consumers get screwed yet again.” Mr Kerslake said.

Energy unions have criticized the NSW Government for pushing ahead with the sale of Macquarie Generation, NSW’s largest supplier of electricity, in what is the latest public asset to be sold off by the Liberal National Government.

Electrical Trades Union NSW secretary Steve Butler said that NSW Treasurer Mike Baird was carrying on as though he has lost the plot, with Macquarie Generation the latest in a long list of privatisations, including Newcastle Port, Port Botany, Port Kembla, the Sydney desalination plant, Sydney Ferries and many smaller asset sales.

“NSW is becoming a poorer state thanks to the long list of asset sales that NSW Treasurer Mike Baird continues to preside over,” Mr Butler said.

“He’s carrying as though he has lost the plot by selling off valuable income generating assets.

“Every single asset that the NSW Government has sold to date has had one thing in common: They generate much needed income for the Government. In the case of Macquarie Generation, the company provided a dividend to taxpayers of $124 million last year alone.

“Once these assets and income streams are sold to the private sector it generally results in higher charges for the general public, a loss of income for future governments and a smaller assets base to borrow against should the need arise.

“Quite simply, the sale of Macquarie Generation doesn’t make economic sense.

“The people of NSW do not want their assets flogged off at bargain basement prices to what are likely to be foreign investors from China, Singapore or Korea.

“The assets of Macquarie Generation are valued at $2.1 billion, but the company also has debts of almost $800 million, meaning NSW taxpayers will likely lose this essential piece of infrastructure for  no more than what they would receive in dividends over the next decade if it was kept in Government hands.

“This fire sale does not make economic sense, it does not make political sense and the only people to win will be the private investors who will seek to recover costs from electricity consumers.

“The ETU, with the help of cross bench MPs, were successful in securing the jobs and conditions of the existing 600 employees for a period of four years, which have been protected through legislation.”

Energy sector unions have attacked the O’Farrell Government over today’s announcement that Mt Piper and Wallerawang power stations will be sold to Chinese-owned EnergyAustralia for $160 million, saying taxpayers have been short-changed by the deal.

The unions said Delta Electricity, the state-owned business selling the power stations, last year delivered a $52 million didivend to the state government and had a book value of $1.75 billion, while their power stations were valued at $745 million.

The Electrical Trades Union and United Services Union, who are leading a community campaign against the privatisation of the state’s electricity network, said the O’Farrell Government’s “fire sale” had now sold four power stations in just four weeks, yet delivered only $85 million for taxpayers after losses.

“What we have seen today is the O’Farrell Government sell the Mt Piper and Wallerawang power stations for a pittance, and all without putting the sale out to competitive tender,” Electrical Trades Union NSW secretary Steve Butler said.

“Taxpayers deserve to know that they’ve got the best deal possible, and that clearly isn’t the case with this ongoing power station sell off by the O’Farrell Government.

“Last year NSW taxpayers received $52 million from Delta Electricity — profits that came from power generation — yet the community has now lost this ongoing revenue source for a measly $160 million.

“It comes just four weeks after the sale of Eraring Energy, where a government-owned company that delivered almost $140 million in profits last year alone was sold off for a loss of $75 million.”

United Services Union general secretary Graeme Kelly said it was outrageous that public infrastructure would be sold without ensuring the best price was achieved for taxpayers.

“Here we have a Chinese-owned company getting a sweetheart deal from the NSW Government that delivers a profitable business at a bargain price with no open tender,” Mr Kelly said.

“Clearly it fails the most basic obligation of a government to achieves the best outcome for taxpayers.

“Our unions don’t believe that any essential public infrastructure should be sold off, but if it must occur, like anyone else in the community we’d expect to see a process where multiple buyers bid against each other, delivering the top price for taxpayers.

“This is nothing more than a fire sale that does not represent value for the people of NSW.”

Unions have criticised today’s announcement of the sale of power generator Eraring Energy as a “fire sale” that fails to realise the true value of the asset for NSW taxpayers

Power industry unions said it was absurd to sell off the profit-making enterprise, which delivered almost $140 million in profits last year alone, for just $50 million.

The NSW Government was also criticised that the sale of Eraring Energy, which owns and operates the Eraring and Kangaroo Valley Power Stations, had occurred without a competitive market tender process to ensure the best price was achieved for taxpayers.

Unions NSW secretary Mark Lennon said Eraring Energy’s own annual report confirmed that the company was worth much more than the $50 million sale price.

“If you look at Eraring Energy’s 2012 annual report you will see that last year alone this company had underlying profits of $137.3 million, which is more than twice the sale value announced today by Treasurer Mike Baird,” Mr Lennon said.

“In addition, this company had a total asset book value of more than $1 billion, including $142 million just in land and equipment assets.

“On top of this measly sale price, the NSW Government will also be making an additional payment of $300 million to Origin Energy relating to the supply of subsidised coal, which means this deal is going to cost the people of NSW millions of dollars.”

Electrical Trades Union NSW secretary Steve Butler criticised the Government’s failure to undertake a competitive market tender process which would have seen buyers bidding against each other, instead negotiating with only one buyer.

“The O’Farrell Government has failed the simplest test to get the best value for money for NSW Taxpayers from this asset sale,” Mr Butler said.

“Treasurer Mike Baird chose to only hold talks with a single buyer for this asset rather than test the market and open the sale to a competitive tender which is likely to have delivered a better deal for taxpayers.

“In March this year the O’Farrell Government spent $200 million on upgrading the Eraring Power Station only to sell it today for $50 million, it doesn’t make sense.

“This is nothing more than a fire sale that does not represent value for the people of NSW.”

United Services Union general secretary Graeme Kelly said that the deal was a disgrace and that the sale should be aborted.

“Here we have the Treasurer practically handing a valuable asset over to the private sector without any transparency,” Mr Kelly said.

“Just weeks after the NSW National Party State Conference voted unanimously to oppose the privatisation of the NSW electricity network, the NSW Treasurer has performed a fire sale of a major electricity generation asset.

“The Government should not be selling any assets, let alone an essential service such as electricity generator, but if they do sell off an asset like this they have a responsibility to guarantee that NSW taxpayers are getting the best deal possible.

“Not only has the NSW Government sold this asset for well under its value, they will also forego future years of profits and dividends that have helped to fund other public services like our hospitals, schools and transport.

“The NSW Government has failed and that is why I believe this deal should be aborted all together or at the very least put out to market tender to ensure the best possible sale price is achieved.”

Full financial details for Eraring Energy can be found on page 40 & 41 in their annual report.