Australia - Row brings to light cracks in the system : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Americans following the Australian power hiccups have wondered how their own system will stand up when summertime stress comes. Here is an article to explain some more how it works, or doesn't work....

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Row brings to light cracks in the system
Saturday 12 February 2000

Victoria's power system has been tested and found wanting in the past two weeks.

The intractable dispute at Yallourn Energy, which withdrew 20 per cent of the state's generation capacity and plunged Victoria into a chaos of power cuts and restrictions, has brought to light cracks in the coordination of the complex system created by privatisation and the national electricity market.

Before privatisation, the State Electricity Commission owned and controlled the whole electricity system in virtual isolation from other states.

Now the system is fractured into small pieces. Independent generators sell power into a national market, five distribution businesses send it to consumers' doors and 22 retailers sell it to customers. Links with New South Wales and South Australia mean that the east coast effectively operates one market and the operation is overseen by the National Electricity Market Management Company (NEMMCO), with the State Government guarding Victoria's interests.

In the past two weeks this complex web of relationships has been strained to breaking point.

The Premier, Mr Steve Bracks, has attacked NEMMCO, saying it kept him in the dark about the state's power situation. And electricity companies have been under siege from customers angry at last week's sudden blackout.

The Premier has called for an inquiry and floated the idea of a new $1 billion generator.

The punters, meanwhile, are scratching their heads wondering what's going on and whether a decade of restructuring has delivered a system that may be unworkable. The new system has had its benefits. Victorian power prices fell 11.6 per cent between 1993 and 1997 but almost all of those benefits, which have been halved since then by rising prices, have gone to business.

The price cuts are the result of competition rather than privatisation, as the NSW system, still in public hands, delivered larger cuts of 23.4 per cent in that period.

Generating efficiency has also improved, with brown coal generators operating 95 per cent of the time now compared with 70 per cent in the days of the SEC.

The problems of recent days have been about coordinating the system effectively. Mr Paul Lorenzini, the chief executive of power distributor and retailer Powercor, said: "All of us involved in the industry must ask ourselves if we did enough."

Ms Andrea Sharam, of the Energy Action Group, described the new system as complex, "and the players don't know the rules". Many industry sources said there was a lack of coordination and leadership before the hot weather early this month.

They believe the Government did not act and develop a response to problems they knew were emerging since 11 January, when the strike began.

Distribution businesses did not alert their customers to the likelihood of shortages and what they might mean. And NEMMCO was slow and ineffective in supplying information about the state's energy situation to the Government and the electricity industry.

The result was unexpected blackouts followed by restrictions that were too severe. After the sudden imposition of restrictions on Thursday, power demand dropped so much that Victorian generators began to export power to NSW, where the price was higher.

Mr Lorenzini said better planning could have led to the implementation of fewer voluntary restrictions, which probably would have better matched demand to supply, preventing the need for power exports and allowing Victorians more power. These, however, were not tried because of "the way NEMMCO works with the distribution businesses and the Government".

NEMMCO, Mr Lorenzini said, did not coordinate the introduction of the restrictions. "It was not their role. We feel they are the only ones able to."

Calls for new generation capacity are premature, according to most observers. Most of the time only 80per cent of capacity is used, so solutions such as upgrading the interconnection from NSW and building the Basslink connection to Tasmania would be more rational.

NEMMCO says it has acted according to its communication protocols, but would "willingly assist" in developing new protocols if necessary.

Electricity distribution companies, which lost money because of the blackouts and restrictions, want compensation. Mr Lorenzini said he would try to recover some of these losses from customers.

Other companies are planning legal action against the Government to make up for losses.

The current system works against energy conservation, placing extra strain on generating capacity, according to Ms Sharam.

Mr Rick Brazzale, the executive director of the Australian Cogeneration Association, said these projects had virtually stopped because of the way market mechanisms discouraged cogeneration.


Sounds a bit like chaos to me. Does 'protocols' sound familiar to Americans?

Regards from OZ

-- Pieter (, February 12, 2000


Sorry, but if you are trying to link this term to "the Protocols of Zion" trash you are wrong. The term "protocols" simply is a term meaning a set of definitions or rules for how things are to be done in specific situations.

We use protocols in medicine all the time.


-- Chuck, a night driver (, February 12, 2000.

Sorry, old chap. Didn't mean that at all.
What I actually meant was that protocols down here is made up on the hop. Nobody quite knows what the business protocols are until someone has thought of it. When the NEMMCO CEO was interviewed last night on TV the incisive questioning went along such lines. He did look rather sheepish and felt the heat. I am beginning to love the journalistic talent here, they are tasting some blood. May not go anywhere, but it was delicious to watch the discomforture.
Regarding the other type of protocols I am sure you can appreciate how sorry I am if you have that impression. I shall be cautious in future, as I was taught to be. Let's just say I slipshodded up a dash...

Regards from OZ

-- Pieter (, February 12, 2000.

OK, obviously problems with the word 'protocol' are going to ruin this debate's observations.

Protocol is a convenient shorthand for;
1. the juice always flows to the higher bidder, even if interstate.
2. the Legislature will be told last of all.
3. the Government will be encouraged to declare an emergency.
4. an emergency will be blamed on those damned socialistic workers.
5. if we can blame the workers we can further muddy the pond.
6. muddying the water means an unwashed public.
7. an unwashed public destabilizes the Government.
8. big business didn't want the Government in the first place.
9. voters will realise they also don't want this Government either.
10. We'll get an election early to get the big business's Government.

Protocols like this are a democracy process. They are not made up on the hop, but we're working on new ones, and we'll let you know soonest...the article says as much...

Does America have such protocols procedurals too?

Regards with protocol!

-- Pieter (, February 12, 2000.

So one state lost 20% capacity when it needed 100% and is suffering shortages. Are the other states running at 100%, or do they have excess capacity that could be sold to Victoria? If they are all running at 100% is there an expectation that they would create locall shortages and pass some on to Victoria so that everyone has an equal shortage? Its a simple question of supply and demand. Private enterprise would allow spot shortages, national control would try to make things equal.

Here in the U.S. we have a heating oil shortage in the north east because suppliers did not purchase surplus stock, which would have cut their profits if it had not been needed.

In both cases paying for excess capacity is like buying insurance. Private industry won't because it hurts profits, but government could because it can afford to care about common welfare.

-- John (LITTMANNJ@AOL.COM), February 12, 2000.

I am not sure what was meant by 'protocols', so I'll pass. However, our country is now proceding toward deregulation which entails many of the same elements mentioned in Pieter's articles. Our main providers are beginning to sell off their generation power plants remaing distributors only; These same distribution lines will provide power by multiple companies to allow customers competition in their choise of provider. Somehow, the grid appears stranded.

There were several articles posted on this forum last fall regarding our power grid. I do not have the ability to retrive those nor do I understand fully what is involued in deregulation of this industry. My experience with the Tel-comm industry is enought. I have multiple long dist. providers seeking my connection over a forty year old line that cannot provide decent Internet service.

I'm just wondering if there are to many hands in the same pot....


-- Tommy Rogers (Been there@Just a, February 12, 2000.

Oh! To be a fly on the wall of Caucus. You'd overhear certain things that would curdle milk. You see, the Premier was made to look right royal amateurish by the surly big end of town. Industrial Relations indeed..., my tongue in cheek appraisal above isn't so far off the mark at all.


-- Pieter (, February 13, 2000.

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