aemc sene public forum october 2010 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
AEMC SENE Public Forum October 2010 PowerPoint Presentation
Download Presentation
AEMC SENE Public Forum October 2010

Loading in 2 Seconds...

play fullscreen
1 / 6

AEMC SENE Public Forum October 2010 - PowerPoint PPT Presentation


  • 97 Views
  • Uploaded on

AGL Energy Limited AEMC SENE Public Forum Professor Paul Simshauser Chief Economist Group Head of Corporate Affairs Tim Nelson Head of Economic Policy and Sustainability. AEMC SENE Public Forum October 2010. Option 4 is the best option suggested in the Options paper

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'AEMC SENE Public Forum October 2010' - fuller


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
aemc sene public forum october 2010

AGL Energy LimitedAEMC SENE Public ForumProfessor Paul SimshauserChief Economist Group Head of Corporate AffairsTim NelsonHead of Economic Policy and Sustainability

AEMC SENE Public Forum

October 2010

agl partially supports option 4
Option 4 is the best option suggested in the Options paper

Signed connection agreement means investors, rather than consumers, take on the financial risk associated with projects

Economic incremental capacity can be analysed within the RIT-T process which analyses costs and benefits of alternative options

Avoids introducing a 3rd & special class of transmission

Ensures consumers are not exposed to risks associated with a proposal not being the best option from a cost-benefit perspective;

Enables time to establish whether in fact a market failure actually exists (i.e. investment coordination)

AGL partially supports Option 4

AEMC SENE Public Forum

October 2010

public policy merit of sene
There is no sound public policy reason for introduction of SENE

SENE is directionally at odds with more than a decade of energy market reform; a shift back to centralised planning needs to demonstrate that the costs of central planning (and there are costs) outweigh the costs of market failure

It is easy to demonstrate that a 300MW line is more efficient than 3 x 100MW lines, but

no market failure (i.e. industry coordination) has been demonstrated, and the rules that once prevented industry coordination have been remedied

There is no precedent in other industries (e.g. gas pipelines, high-rise buildings)

Modelling now exists that shows that societal welfare is higher where renewables are delivered closer to the existing grid

And the RIT-T already applies to network extensions

Public policy merit of SENE

AEMC SENE Public Forum

October 2010

agl agrees with the criteria for assessment
Efficient investment in electricity services

The market is best placed to determine which investment is efficient

AEMO, AER and NSPs know significantly less about optimal locations for merchant investment than market participants because of real world investment constraints & private information. The NEM is a prime example of where good economic theory and the harsh realities of real-world corporate finance quite simply collide

Efficient risk allocation mechanisms

The most elegant outcome of the NEM reform was shifting the cost of planning failure from customers to shareholders; SENE proposal absolves investors and NSPs of financial risk

SENE involves the privatisation of profits and socialisation of losses associated with a decision which customers have no control over

AGL agrees with the criteria for assessment

AEMC SENE Public Forum

October 2010

energy investment expertise
To actually bank a merchant project to financial completion, it requires the coordination and collective skills of:

Investment banks

Corporate institutional or project finance banks

Merchant utility energy trading desks

Legal, Taxation and Engineering firms

Power development business

AEMO, NSPs and the AER do not have (nor should they need) this expertise

Energy investment expertise

AEMC SENE Public Forum

October 2010

investment hit rate indicates picking winners is impossible that s why we deregulated
Investment hit rate indicates picking winners is impossible – that’s why we deregulated

Source: Simshauser (2010), Capital adequacy, ETS and investment uncertainty in the Australian power market, Electricity Journal, Vol 23. No.1.

AEMC SENE Public Forum

October 2010