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.”