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Know your NEM: The profits CLP didn’t make from Australian brown coal

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The interesting news of the week so far is how much money CLP didn’t make in Australia from Yallourn. CLP’s results are for the six months ended June 2017. Gas prices have been high throughout, and CLP is only a buyer and user of gas, not a producer.

Yallourn has 1480MW of brown coal capacity, but it’s likely that much of the output is hedged one way or another and the higher spot market prices only gradually get passed into results. This is a constant difficulty for analysts; the lags between when the market sees something happening and when it actually shows up in results.

In any event, we can hardly see EnergyAustralia telling Malcolm Turnbull they’ll cut prices to consumers on the back of these results when they meet this week.

Figure 1 EnergyAustralia interm results. source: Company

Figure 1 EnergyAustralia interm results. source: Company

Policy and new supply Turning to the weekly action

  • Volumes: were down across the NEM other than in South Australia. Only NSW  and Tasmania are showing increased electricity consumption for the year to date as an entirety. Victoria is showing the largest decline (4%) in CYTD consumption.
  • Future prices: Prices rose in NSW and are clearly above the recent lows. It’s hard to know what to attribute this to. Elsewhere prices were essentially flat on last week
  • Spot electricity prices: Averages of the weekly spot price across the states ranged from $75/MWh in Queensland up to $117 MWh in Victoria. We are not sure that the Victorian government is taking the right messages from the high prices. What’s needed in Victoria is either much cheaper gas, unlikely in the short term, or more new renewable supply to force the existing high price gas out. We’ve been a bit disappointed with the lack of progress on Victoria’s reverse auctions. Clearly missing the timetable.
  • REC prices rose this week basically prices on very thin trade were up 6 per cent across the spot market up to 2019.  In theory, if you have an uncontracted wind farm in NSW you can get a $70 -$80 three-year REC contract and around $80/MWh for the black power so $160/MWh. This covers a lot of risk in the out years.

Gas prices: There were some high spot gas prices but generally the 30 day moving average of South Australia, NSW and QLD has held at the $8 GJ mark showing none of last year’s squeeze. Although the Queensland government is getting most of the credit for the fall in the state’s electricity prices, you can see that the spot gas price in Queensland is now down to $6 GJ which helps a bit.

Utility share prices: A better week for the share market with AGL, ORG and IFN all doing well going into reporting season.

Figure 2: Summary

Figure 2: Summary

Share Prices

Figure 3 Selected utility share prices.

Figure 3 Selected utility share prices.

 

Figure 4: Weekly and monthly share price performance

Figure 4: Weekly and monthly share price performance

Volumes

Figure 5: electricity volumes

Figure 5: electricity volumes

Base Load Futures , $MWH

fig6

 

Figure 10: Baseload futures financial year time weighted average

Figure 10: Baseload futures financial year time weighted average

Gas Prices

Figure 11: STTM gas prices

Figure 11: STTM gas prices

Figure 12 30 day moving average of Adelaide, Brisbane, Sydney STTM price. Source: AEMO

Figure 12 30 day moving average of Adelaide, Brisbane, Sydney STTM price. Source: AEMO

David Leitch is principal of ITK. He was formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.   

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  • George Darroch

    “We’ve been a bit disappointed with the lack of progress on Victoria’s reverse auctions. Clearly missing the timetable.”

    Could someone explain this in a little more detail?

  • juxx0r

    The big question still remains, how many shares are there in a metre?