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Fresh hope on power prices

Thursday, 17 January 2013
Author: Kevin Naughton, Indaily

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THE days of South Australia's electricity prices being dominated by high prices on around 10 peak use days a year are about to end.

A proposal to increase the capability of the South Australian-Victorian electricity interconnector will open up an extra 40 per cent capacity to import lower-cost generation into the state, particularly at times of peak demand, a report concludes.

The proposal to install a third transformer at Heywood in Victoria and boost transmission lines in South Australia has been confirmed by the Australian Energy Market Operator as the preferred option to increase transfer capability.

The decision has been welcomed by South Australia's Essential Services Commissioner Paul Kerin.

"This is very important," Dr Kerin told Indaily.

"It changes our very peaky market on those hot days where demand is high.

"The main reason we have had much higher prices on those days has been the lack of capacity in the interconnector.

"Consumers can expect a consequent reduction electricity prices from the first summer after the project's completion."

The project - an Interconnector Upgrade - has been put together by transmission company ElectraNet.

Last week a Project Assessment Conclusions Report - prepared by ElectraNet and the Australian Energy Market Operator (AEMO) - was released to the market.

The report shows the project delivers a net market benefit through significant reductions in generation dispatch costs over the longer term.

"The preferred option... is expected to increase interconnector capability by about 40 per cent in both directions," it concludes.

"This would enable increased wind energy exports from South Australia and also increase imports of lower cost generation into South Australia, particularly at times of peak demand."

The estimated commissioning date for the $108 million project is July 2016.

The investment in infrastructure includes $45 million in Victoria and $62.7 million in South Australia.

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