SA Premier turned down a $30m coal deal that could have saved a billion dollars

The SA blackout cost around half a billion, and building a new gas plant (with a $170b in green bribes) adds another half. It’s now emerged that Alinta offered Jay Weatherill a deal to keep the Port Augusta power plant running which he turned down. If he had paid just $30m to keep the Northern coal fired station in business, there might have been no statewide blackout, and no need for regular load shedding. Wholesale electricity contracts in SA have risen from 8c per KWhr to 14c since mid last year.

The owner of the now-defunct Port Augusta power station made a secret offer to keep generating electricity until mid-2018 in return for $25 million from the State Government — 22 times less than its $550 million power plan.

In the six-page letter supplied to The Advertiser by the Liberals, Alinta warns of significant risk to the security of South Australia’s power supply and a surge in electricity prices — costing the state $56 million to $112 million a year — if the power station and associated Leigh Creek brown coal mine were to close.

Other sources have told The Advertiser that Alinta made another bid for $30 million to the government, which made a rejected counter-offer of only $8 million. Alinta then announced in June 2015 that it would close the station.

WHAT ALINTA WARNED

Closure of Port Augusta power plant would trigger:

■ Significant risk generally to SA’s power supply security.

■ Likely increase in wholesale cost of electricity, between $4-8 per megawatt hour. This would cost SA economy $56-$112 million a year.

■ $150 million of regional gross domestic product is cut.

■ $4.5 million lost revenue in foregone coal royalties in payroll tax.

Businesses across the state took an estimated $450 million hit because of the statewide blackout and mining giant BHP Billiton has said that outages at Olympic Dam cost it $137 million.

Having knocked back such a sensible offer, the SA government did what any self-serving government would, and kept the offer hidden, even after FOI requests. Weatherill cited a confidentiality clause. Nonetheless, the Libs have the whole document, and now so does everyone else.

Presumably Weatherill could not bring himself to “subsidize” coal power — how the Greens would have howled. But how screwed up is the free market when the cheapest form of electricity needs subsidies to compete with other subsidies offered one of the most expensive competitors. All Weatherill would have been doing is giving back some of what Big-Government had taken. Alinta closed the cheapest power source in SA because it was forecast to lose as much as $10m a year by 2020.

Weatherill made a billion dollar mistake presumably to stop people like Sarah Hanson Young calling him names. How much more will the people of SA have to pay for Weatherills ideological zealotry?

BACKGROUND to the SA Electricity crisis (post posts on the topic).

People saw The South Australian black out coming. There were warnings that the dominance of renewables made it vulnerable. Then when it came, it all fell over in a few seconds — read the gruesome details of how fast a grid collapses: Three towers, six windfarms and 12 seconds to disaster. Ultimately the 40% renewable SA grid is crippled by complexity. The AEMO Report blames renewables: The SA Blackout was due to lack of “synchronous inertia”. The early estimates suggest the blackout costs South Australia at least $367m, plus their normal electricity is twice the price, and there are reserve shortfalls coming in January 2018 (pray for a cool summer). Welcome to the future of unreliable electricity: Rolling blackouts ordered in SA in 40C heat. And more bad luck for South Australia, yet another blackout, 300 powerlines down, 125,000 homes cut off. See all the posts on Renewable Energy and Electricity Grids.

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