" Blackouts " ahead ?

 It seems that " push "has moved to " shove " when it comes to a reliable power supply for New South Wales.  Thirty-five percent of the electricity used in this state is generated by two power stations owned by AGL and both Liddell and Bayswater are linked by high tension transmission lines.  AGL has announced the removal of that link as part of it plan to close down the ageing Liddell power station.

AGL is a business owned by its shareholders and since 2015 Liddell has been on the chopping block for closure because of its unreliability.  The state government has been negotiating to keep it open until new electricity generation comes on line in the Snowy mountains and that prospect is not attractive for AGL from a commercial point of view.

A government review has been examining our power needs and AGL's announcement that Liddell will be " decoupled " from Bayswater has preempted  any finding it might deliver.  It seems that Liddell is essential to keeping the lights on in the coming summer and we are just a week away from the start of Spring.

This is the economic clash that many people saw coming when the government decided to sell the electricity generating industry to free up funds for other road and rail improvements that were deemed essential.   We were reliant on ageing power stations that burned coal to provide power, and now they were in the hands of commercial companies who needed to make a profit to keep their shareholders happy.

There is a real doubt that Liddell can meet its share of the load because of plant age, but coupled with Bayswater the two might manage to tide the state over days of high demand.  AGL has chosen to choke off that option by severing the link that connects the two stations and now the problem requires government action.  What that might be could be constricted by the legal options available to the government.

One line of thought involves forcing AGL to sell Liddell to either the government or another competitor, but that would involve countless delays in the court system.  There is no doubt that Liddell needs to be replaced by a modern power station, but that is a commercial decision that must be made by AGL's board of directors.

All the options have been under consideration for several years - without a final decision.  AGL has cleverly decided that " brinksmanship " is the only way to force the issue. Liddell will remain technically functional but once those transmission lines are removed both it and Bayswater will need to operate as freer standing units and Liddell reliability can not be masked by mixing the output with that from Bayswater.

This is what many critics feared.  A clash between a big commercial operation and its need to make logical economic decisions and the responsibility of the government to provide a reliable power supply. Those two ends are not compatible and what is at stake is the prospect of blackouts if power generation falls short of demand this summer.

It is in the interests of both to reach a workable conclusion to try and reduce the COVID-19 impact. The odds are that a last minute deal will be cobbled together in some smoky, backroom dealing and Liddell continues to work for the immediate future at added cost to the taxpayers of New South Wales  !