Based on remarks by its chair, Jim Soorley, CS Energy has the ability to increase generation capacity by 750 MW. It will forgo that to reap increased profits from electricity prices which are moving higher because of shortages of generating capacity. This is a self-generating vicious cycle for electricity consumers which enriches power generators to the detriment of consumers and business.
• Speaking on Steve Austin’s ABC Brisbane Morning Show (from 1:08:00) former Lord Mayor of Brisbane, and current chair of government-owned CS Energy, Jim Soorley, confirmed that the improvement in net profit before tax from -$28.137 million in 2016 to +$403.677 million in 2017 was due to higher electricity prices (p11 CS Energy Annual Report 2017).
• Mr Soorley confirmed that Kogan Creek was built to be doubled in size and capacity existed for this to happen. Kogan Creek has 750 MW capacity, so a doubling in size would cost $1.5 Bn or less – 3.7 times annual profit before tax – and add 750 MW to the network.
• Kogan Creek is earning a super-profit and achieves a return of 17.9% on its assets (p9 Annual Report), clearly showing that the market is currently undersupplied. This will only increase as electricity prices continue to climb.
• It is highly profitable for existing electricity generators to restrict supply, and as AGL demonstrates with the proposed closure of its Liddell power station, to withdraw some of its own supply from the market.
• CS Energy is a price maker in the electricity markets, with 34% of the Queensland market, and 10% of the national market.
• Mr Soorley said that a new coal-fired power station in Queensland is not economic, but the facts show otherwise, and it could easily be built by CS Energy, funded by their super-profits.
• With the likely closure of Liddell, and support for increase in the capacity of the interconnector from NSW’s TransGrid not only would there be support for the power from Queensland, but a need for it in New South Wales. It could be highly profitable for the Queensland taxpayer, and support an increase in local industry, while containing local power costs.
• There would still be a need for an additional power station in North Queensland.
“The Queensland government should direct CS Energy to develop the second stage of the Kogan Creek power station at the same time as PowerLink should be directed to cooperate with TransGrid to investigate increasing the capacity of the interconnector.
“A state government-owned power generator should not be allowed to perpetuate a vicious cycle of power increases by withholding potential generating capacity from the market.” Graham Young