AGL is not a charity or government department

Now I’m no fan of AGL – it is mainly a green rent-seeker these days determined to make a buck by pretending to go along with the climate change story while seeking out the most profitable (and guaranteed) ways of fleecing electricity consumers and taxpayers.

(No longer content with the RET, these green rent-seekers are now seeking the mother of all subsidies by urging state governments to conduct reverse auctions on contract for differences, which is just a cute way of distributing taxpayer money to electricity companies using renewable energy on a guaranteed basis with extremely high coupon rates.

Watch Victoria, in particular, as the Andrews government uses reverse auctions to distribute cash to renewable energy companies (in which industry super funds are heavily invested) all the time arguing efficiency and sustainability (my arse).)

But having said that, it is not the role of AGL to prop up the Alcoa aluminium smelter in Portland.  For that matter, it was indefensible that electricity should have been subsidised to the smelter for two decades – it was just a case of blatant industry protection that would eventually end.  Mind you, it is not the fault of the workers at the smelter and the longer the subsidy continued, the greater the adjustment costs of a closure of the smelter.

The timing of the end of the subsidy could not be worse as the impact of crazy green interventions on electricity prices  really begins to kick in and the Hazelwood brown coal fired power station is about to close.

But industry minister, Greg Hunt, is completely off his trolley when he says: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job.”

It is not the role of AGL to do anything other than to act in the best interests of its shareholders and to do otherwise potentially violates the Corporations Act.  (Officers and directors must act in the best interests of the company and shareholders.)

The idea that AGL would cut Alcoa a special electricity deal is completely fanciful; it also begs the question whether AGL would seek to recoup the poor return from the deal by charging other customers more.

You really wonder about the Turnbull government when you have numpties like Hunt making such a fatuous remark.

(In terms of the future of Portland, Boyne Island and other aluminium smelters in Australia, the outlook is grim.  Smelters are being build in the west of China with cost of production half or less what is obtainable here.  It is really only a matter of time, although the green energy policies will have hastened the demise of these smelters.  But of course this is really what the Greens and Labor and probably the Liberals really want.  We will easily meet out emissions reduction target by the process of deindustrialisation.)

 

Energy giant AGL has defended its power supply negotiations for the Alcoa aluminium smelter in Victoria’s Portland as thousands of regional jobs hang in the balance.

With the state and federal government lobbying the power company to strike a fair supply deal so the smelter can stay open, AGL this morning rejected the future of the Alcoa smelter was in its hands.

Alcoa has been offered a $230 million bailout by the state and federal governments after a blackout savaged its manufacturing production.

Alcoa will also need a competitive power deal to stay open after its 20-year-old electricity supply agreement, which included a generous government subsidy, expired in November.

The Australian reported this morning that AGL had been warned it risked damaging its reputation with the public and government if it failed to strike a fair-priced power deal that would keep open the smelter and support 2000 regional jobs.

Industry minster Greg Hunt and Premier Daniel Andrews have both spoken to AGL chief executive Andrew Vesey, arguing a deal would be in AGL’s interests.

AGL hit back at criticisms of its negotiations with Alcoa, arguing it was working “in good faith” and noted it was not the only supplier that could provide energy to the smelter.

“AGL has not been the historical energy supplier to the smelter and is not the only available energy supplier that could provide a contract to the smelter. Therefore, it is incorrect to portray the electricity negotiations with AGL as central to the future of the Portland smelter,” the company said in a statement this morning.

AGL said it had a contract with Alcoa that was due to commence in October 2016 but Alcoa chose to terminate the contract in August.

“AGL is mindful of the need to avoid imposing additional costs on its other customers when entering any new contracts,” the company said.

“The absence of a coal closure rule, which signals well in advance when coal plants will close, means that the sudden closure of plants like Hazelwood can have a dramatic impact on the electricity market.

“ AGL and Alcoa were close to reaching terms when the Hazelwood closure announcement was made. Despite the disruption to electricity forward markets caused by the Hazelwood closure, AGL has continued to work in good faith towards a contracting arrangement which is in the best interests of both Alcoa and AGL. These discussions are ongoing.”

Mr Hunt said yesterday: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job.”

 

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44 Responses to AGL is not a charity or government department

  1. Bruce of Newcastle

    I wonder where AGL is going to get the G part of its name from, now that just about all states have banned gas exploration and/or development?

    Maybe they’ll have to rename themselves Overseas Gas Limited.

    AGL mulls $300m gas terminal to import LNG as prices rise

    AGL Energy is considering spending as much as $300 million building a terminal to import cheaper natural gas into the southeastern states from as far away as Europe or the Middle East because of limited domestic gas availability and high local ­prices in the wake of $70 billion of LNG export plants being built in Gladstone.

    Won’t it be fun when South Australia has to generate its electricity from Qatarese gas? Today, btw, they are producing about two thirds of their electricity from gas because the wind isn’t blowing so much.

  2. incoherent rambler

    It is not the role of AGL to do anything other than to act in the best interests of its shareholders

    It is probably in the shareholder interests to scam as much money as possible from the AU taxpayer aided by Wattac.

  3. Dr Faustus

    But industry minister, Greg Hunt, is completely off his trolley when he says: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job.”

    He is actually acting rationally – for a politician. The internal political contradictions of ‘doing something about emissions‘ and ‘reliable, affordable electricity‘ are now very publicly chewing the arse out of Australian economic policy.

    Hunt has no real choice but to try to publicly bully AGL: when Alcoa shuts up shop the buck has to stop somewhere other than Government in general, and Hunt in particular.

    And he will be well aware that, if AGL complied, the quid pro quo would be transfer payments from the industrial tariff into the Australian aluminium industry. These people are desperately using their Myer Card to pay off American Express…

  4. John Michelmore

    Without viable cost effective power generation capabilities Australia has a real long term problem. Bad luck governments can’t see past one electoral cycle. One really wonders why we allow them to sell our essential utilities, that the people originally owned, like electricity, and we loose control of energy supply for the next decade at least. Prepare for things to get much worse than this. I am tired of the major parties deflecting blame wherever they can when in reality they were at the helm when decisions about selling assetts, the power generation mix, propping up wind and solar, and the total lack of foresight in relation to critical base load power including nuclear. Government is responsible for this mess, not AGL as they would like us to believe!

  5. John Michelmore

    I can’t resist, I thought AGL meant Australian Government Lectricity!

  6. Stackja

    ALP/AGL a profitable partnership!

  7. Just interested

    How long will it be until people actually make the point every single time that unless the Libs abandon the RET they are as complicit in the de-electrification of Australia as the Greens and the ALP. Don’t let the Libs off the hook!

  8. James of the Glen

    Hunt has been an idiot Warmist for years. He’s on a par with the Wong chap; who can forget his (and Macfarlane’s) collaboration with her prior to Tony Abbott removing Turnbull. That the Liberal Party still preselects this poorly read, doily rearranging, ignoramus underlines its increasing loss of direction and purpose.

  9. Jonesy

    …and to think we have 200years worth of natural gas pouring out of the north west shelf, another 30 years, at least, of Bass strait gas…AGL get their gas from Bass Gas and Port Campbell. Plenty of conventional gas still under Gippsland paddocks. Still pulling gas out of Central Australia and bloody Surat basin just keeps producing from different directions. Even South Aus has untapped resources that could well rival the middle east. The only impediment is lack of royalty flow to farmer/land users and the bloody inner city greens who have no clue where even their shit goes let alone where food and water come from.

    500 years worth of brown coal in Victoria as well as shit loads of black coal untouched in South Australia. Queensland has a whole new province to come on line. New South Wales has shit loads…same thing…bloody inner city greens!

  10. Machaggis

    Judith
    Spot on! The subsidy to Alcoa was negotiated by the Cain government over the protest of the SECV that really paid the price. The government cleverly agreed to a price tied to the world price of Alumina at the time assuming that the price would rise and the electricity price rise with it. As it happens the price turned out to be the peak never again, I think, reached because of the formula.
    Th chickens have come home to roost for the government although they will be pleased if it closes down because they prefer workers losing jobs to having to face the problems of the Hazlewood closure. If Loy Yang A is released to supply the State and SA the labour States will breath a sigh of relief

  11. candy

    such a fatuous remark.

    This is simply slagging off at a big company (with a rich CEO etc type of narrative), similar to what Greens do every day and it works on people who are struggling economically and feel the big oil/coal corporations are to blame for loss of work etc.

    It’s to get Newspoll figures up. That’s all. Don’t look too deep.

  12. rickw

    Mr Hunt said yesterday: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job.”

    This is precisely what all levels of Australian Government are doing with their incessant energy masturbation.

  13. Art Vandelay

    Some commenters need to to do some research. The higher prices in the electricity market have very little to do with privatisation.

    In fact, research from the Productivity Commission and others has found that prices have increased faster in States where the industry is publicly-owned because ‘privatised networks “have much better cost controls”’ for example.

    Fact check: privatisation is definitely better for electricity bills

  14. Rev. Archibald

    We will easily meet out emissions reduction target by the process of deindustrialisation.)

    ..
    I used to make aluminium extrusion dies.
    Huge billets of aluminium heated up and pushed through a massive die and backing plate.
    I don’t think we have that industry anymore either, at least the place I worked at is gone.
    Fuck we can’t retain any industry here. This place is fucked. Deliberately sabotaged by idiots.
    I would guess one of the biggest costs when making aluminium is electricity.
    The stuff has to be liquified in pots using electrodes.
    By cost aluminium is pretty much solidified electricity.
    Closing smelters are another symptom of our shit energy sector, fucked unions and dickhead politicians.

  15. Bruce of Newcastle

    This is simply slagging off at a big company (with a rich CEO etc type of narrative), similar to what Greens do every day

    AGL are unusually plugged into greenery Candy. I decided that I would never do business with them when they announced a ginormous solar plant out at Nyngan.

    There’s a difference between welcoming the totalitarians vs being forced to do such stuff.

    AGL’s Nyngan and Broken Hill solar plants officially opened

    Catastropharian slimeballs.

  16. Rev. Archibald

    It’s ok though.
    We will just populate the place with imported head lopping lunatics to stop the Chinese from taking over completely.

  17. miltonf

    We really need good independents to run against the likes of O Dwyer, Bishop and Hunt. But will the electors in those seats stop drinking the kool aid? Was shocked that Falinsky still got in in Bronwyn Bishop’s old seat.

  18. Rohan

    Bruce, they’re all in in it. Every single one of AGLs competitors.

    The industry magazines are all green too. Almost nothing about baseload issues. Just green mantra that drones on and on and on.

    It’s stunning to watch this suicide of an entire industry.

  19. Habib

    As opposed to assorted local, state and federal governments forcing thousands out of business and jobs through artificially inflating costs of energy while buggering reliability, let alone those fucked over by rafts of other imbecilic policy. These cretins should be infected with smallpox, it’d be worth bringing it back to see them suffer.

  20. miltonf

    Yes Habib it’s a full on attack on regular working (productive & taxpaying) men and women by the political class.

  21. OneWorldGovernment

    Rohan
    #2252897, posted on January 5, 2017 at 7:58 pm

    Bruce, they’re all in in it. Every single one of AGLs competitors.

    The industry magazines are all green too. Almost nothing about baseload issues. Just green mantra that drones on and on and on.

    It’s stunning to watch this suicide of an entire industry.

    Not to mention the suicide of a country.

  22. RobK

    Unfortunately all the pessimism is not unfounded and those industries lost will not return for a long time. It needn’t have to be this way. The only chance is to update now HELE coal and attract what investment we can. Perhaps look over the Pacific……Make Australia Great Again. We need a decent orator to start with.

  23. Andrew

    Mr Hunt said yesterday: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job. That’s the role of Parliament.”

  24. Andrew

    Loss of Portland is a good outcome under our current arrangements. For 2000 jerbs, it offsets the loss of abszelsood (which would otherwise cause a clusterfuck of soaring prices and rolling blackouts unknown in a developed country). PLUS it helps meet our Paris commitments. We have so fucked the country that we actually have to HOPE for emitting industries to close because the alternative is fucking over 25m people instead of 2000.

  25. john constantine

    The rationing of social justice electricity falls first and hardest on tory electorates.

    Look at the electoral map of south aus, and the blackout map.

    Rolling blackouts for vicco are core for the coming social justice electricity regime, tory electorates go first, taking turns at returning to the dark ages, while inner city greens electorates stay in their light.

    Social justice.

  26. John Comnenus

    I think it would be unthinkable for an Australian Government to consciously introduce policies that will cost 200,000 jobs in regional Australia. But hey Greg, that’s what you have done. AGL is only responding to the regulatory environment you and the Vic Government have put in place.

  27. Bean Counter

    One more time……

    Can Cats who want to link to articles behind paywalls (yeah Art Vandelay; you too!) please do the following…..Copy a paragraph from the article and paste it, with a mention that the whole article is good stuff. This way we will not need a subscription to every paywalled agency on earth.

    For Cats not aware of it, you can then go to Google and put the pasted paragraph in the search box, and hit Enter. Cheers.

  28. RobK

    Andrew,
    How does exporting our CO2 emitting industries mitigate world CO2 emissions, even if that is a thing to worry about?
    Around the world many High Efficiency Low Emmissions coal power plants are being built as primary power sources, a number will use our coal as feedstock. What is the rationale to justify us capitulating our economic diversity?
    Do you believe a post “Paris Agreement” world, where emitting industries have migrated to the exempt developing countries, is benificial to climate change mitigation, world peace, international competivenes, energy efficiency or sovereign stabilty? If so, how so? It sounds like an expensive, very risky kum-by-yah plan to me. We will be completely dudded.

  29. Ross B

    Q(andA) for those seated in our various parliaments;

    Q. Since Kevin Rudd uttered the words “greatest moral, economic and social challenge of our time” what was the average annual growth rate of world alumina production?
    A. 4.91%

    Q. By how much has Australia’s approximate share of world alumina production fallen despite global alumina demand outpacing global GDP by more than 2.5% over the same time-frame?
    A. -8.84%, from 25.78% to 16.94% at the end of 2016.

    Q. Given the abundance of evidence that unilateral action in the name of combating climate change only serves to shift industrial production to lower-cost sites, doing nothing to change emissions trends but weakening Australia’s international trading position, why have none of you been willing to call-out this absurdity?
    A. ______

  30. Garry

    My brother in law worked at the Electrolux factory in Orange. The factory was at one time the major employer in Orange. The employees were offered a package to keep the factory open which included some changes to conditions and limited pay rises. The employees through the union refused to accept and the factory closed and is now in Asia somewhere. My brothers in law’s comment was something along the lines of ” why should we be expected to work for less than we had before” . My comment was ” now you don’t work at all”. Same thing will happen with these smelters I would guess. The complacent golden goose is dead in Australia, too many people in developing countries willing to do whatever it takes to get ahead and we are being priced out of existence!

  31. stackja

    Garry
    #2253304, posted on January 6, 2017 at 8:47 am

    Australians have work choices.

  32. Cannibal

    I wonder where AGL is going to get the G part of its name from, now that just about all states have banned gas exploration and/or development?

    That’s easy.
    G stands for gullible, as in voters, a majority of whom don’t pay any net tax.

  33. Cannibal

    G now stands for gullible.

  34. Pyrmonter

    @ Ross B

    What benefit is there in keeping a high cost industry going? As others upthread have pointed out, Alcoa was in receipt of industry welfare; why should this continue? The hold the mythology of “industry” as a better means of creating wealth than services or agriculture has on the Cat (Katterlaxy?) these days is bizarre; these are the shop-worn ideas of rent-seekers, unionists and left-wing economists of the 1950s, not either libertarians or those who can rightly be called “centre right”.

  35. Art Vandelay

    Can Cats who want to link to articles behind paywalls (yeah Art Vandelay; you too!) please do the following…..Copy a paragraph from the article and paste it, with a mention that the whole article is good stuff.

    Sorry, when I posted it yesterday, it didn’t appear to be behind their paywall. (The Australian can be a bit hit and miss like that.) When I link to a paywalled article, I always put the headline as the link title so it’s easy to search for. In this case, it’s the first search result.

  36. RobK

    Pyrmonter,
    I accept your arguement of “industry welfare” and reference to the 50s. Your reference to politics after that is somewhat blindsided. In the 50s the concept of strategic industries and materials was fresh in everyone’s mind. Yes, protectionism is bad in a pure and simple form. The world today is as competitive as ever and dumping and rentseeking are the stock in trade of many dealers with clever work arounds by shrewed operators, large and small…but mostly large.
    Somewhere in the middle is a sweet spot of economic diversity, strategic security, jobs etc vs free markets, level playing fields etc. It is folly to think that 50s mentality, which was pro-development, was only about unionism and rent seeking. In today’s world that is the relm of climate change mitigation.

  37. Rev. Archibald

    As others upthread have pointed out, Alcoa was in receipt of industry welfare; why should this continue? The hold the mythology of “industry” as a better means of creating wealth than services or agriculture has on the Cat (Katterlaxy?) these days is bizarre; these are the shop-worn ideas of rent-seekers, unionists and left-wing economists of the 1950s, not either libertarians or those who can rightly be called “centre right”.

    ..
    No it isn’t.
    It is not “either – or” is it?
    It isn’t either subsidise industry or don’t have an industry.
    It is this: fucking well have the guts to address why our industries are not competitive.
    Start with government “sustainability” interference in energy.
    Move on to unions and big business cronyism.
    You know this.
    Fuck me you know this.
    Why do you pricks insist on ignoring the obvious and persisting with joining hands with Greens, communists and other assorted traitors in destroying our industries?
    Why?
    What is it about you that revels in the destruction of Western industry?
    And don’t give me that creative destruction crap.
    You are on the side of the greenies, the unions and the communists.
    You are the one that wants to live in an agrarian socialist shit hole.
    Your every action is designed to bring it on.
    After you bring about your de- industrialised ground zero of multi generational welfare cases and bloated B-Ark of telephone sanitisers and hairdressers, do you think there will be anything left of our culture to bring it all back?
    A – fucking – one delusional.
    I don’t believe your type has produced a single useful thing your entire lives.

  38. Rev. Archibald

    While you lot are engaged with the unions, internationalists and greenies in a race to see who can quickest destroy the West’s industrial base, undermine it’s people’s work ethic and debase any cohesion we have left, all around the world the people are waking up to your shit and turning to Trump as an example.
    In one or two more years your ideas will have been swept aside.
    God I hope.

  39. Defender of the faith

    MacHaggis: the Portland subsidy arose when the Hamer government stupidly agreed pricing on power that was based on old capital costs when it clearly required new plant to supply. Not only has the subsidy been a drain on Victorian power consumers and state budgets for 40 years but also imposed a very poor capital outcome for loy yang power stations until they were privatised.
    The Portland smelter is a monument to political industry policy just like Kwinana steel plant and shell Geelong. The biggest current scam is the failure of governments to manage the gaming of gas reserves by large companies that have imposed huge gas price increases by refusing to bring gas to production.

  40. Andrew

    Q. Given the abundance of evidence that unilateral action in the name of combating climate change only serves to shift industrial production to lower-cost sites, doing nothing to change emissions trends but weakening Australia’s international trading position, why have none of you been willing to call-out this absurdity?

    And of course I publicly made that argument in 2006 when Howard6666 started pretending to have a carbon tax plan. And was mocked and called all sorts of names for predicting what has precisely come to pass.

  41. Andrew

    How does exporting our CO2 emitting industries mitigate world CO2 emissions, even if that is a thing to worry about?

    Clearly it doesn’t. To the extent to it’s our alumina shipped to China with our coal on diesel ships it worsens global emissions. That’s obvious.

    I said that closing Portland is the least damaging way of meeting our Paris commitments. I didn’t say committing to the Paris agreement did the world the slightest good for the self harm we promised.

  42. RobK

    Thanks Andrew,
    I mis-read your meaning.

  43. Robbo

    Mr Hunt said yesterday: “I think it would be unthinkable for a major electricity company to consciously and deliberately force 2000 workers out of a job.”

    Hunt may well be a member of the Liberal Party but he leans to the political left just like his leader Malcolm. Once upon a time the Liberal Party stood for smaller government. less regulation and freedom for business to get on with its task. (It also stood for freedom of speech, but 18c makes a mockery of that now.) Hunt is just like Turnbull, he could easily have fitted himself into the Labor Party but decided instead on the Liberals. The only thing he really believes in is himself. No wonder so many are now seriously contemplating voting for any decent alternative to the Liberals.

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