Oz electricity market moves step ahead, US in turmoil

The National Electricity Market Management Company approved two projects worth $154 million in order to boost the interstate trade in electricity.

The first project is the 250 megawatt, $110 million link between NSW and SA. The second is a $44 million beefing up of the existing Snowy Mountain link between NSW and Victoria.

Industry analysts believe the lack of interstate links is a key weakness in the market that contributes to tight summer power supplies in Victoria and SA. A situation unlikely to improve this summer despite the approval of the two projects according to industry insiders.

Aggravating the situation in Victoria is the continuing strike action by unions against Yallourn Energy. The unions have decided to extend their strike action by a week against Yallourn, which supplies 20 per cent of Victoria's energy needs. The unions believe management reneged on a deal not to seek retrenchments.

On the other side of the Pacific, the USA is counting the costs of its failed experiment in energy market deregulation. California, which according to some economists has an economy bigger than all but a handful of nations, is suffering from blackouts and power rates 40 per cent higher than last year.

If that situation wasn't bad enough, the US energy market had to suffer the ignominy of the Enron collapse, which has raised the spectre of re-regulation by government. The US will likely require big additions to its power production and distribution capacity when it emerges from recession, however it seems capital markets are in no mood to cough up the necessary funds.

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