Some 20,000 people in Broken Hill and surrounding communities in far western New South Wales were left for more than a week without power after a major windstorm on October 17 brought down seven electricity transmission towers.
The region suffered from rolling blackouts because one back-up diesel generator was off-line, and the other failed due to demand.
Recriminations and counter recriminations have been leveled at private energy company Transgrid and AGL, which owns the Brown Hill Battery Energy Storage System, which is supposed to have a back-up for such circumstances.
It has since emerged that AGL had disabled it under orders from Transgrid but, under mounting pressure, was forced to reverse course and switch it on.
Broken Hill Mayor Tom Kennedy alleged the generators were not maintained adequately. Labor Premier Chris Minns blamed the former Coalition government for privatising the electricity assets. The Coalition asked why the second generator had been offline.
Locals are asking why, with wind and solar farms near-by, they can still not access energy.
The Australian Energy Regulator (AER) and the Independent Pricing and Regulatory Tribunal (IPART) have launched investigations into whether Transgrid breached its obligations or license requirements. If found liable, it could be fined up to 10% of its annual turnover, estimated to be up to $90 million. IPART can issue fines of up to $250,000 for breaches, or it could change Transgrid’s license conditions.
Transgrid was established as a statutory authority, by the Electricity Commission of NSW, in 1995, when the deregulation/privatisation process began. The Kristina Keneally Labor government controversially sold the energy retail arm in 2010 for $5.3 billion, but kept the infrastructure in public hands.
The Coalition government sold Transgrid for $10.3 billion in 2016 to a consortium, comprising a Canadian pension fund, the Abu Dhabi Investment Authority and local infrastructure funds.
Electrical Trades Union NSW/ACT Secretary Allen Hicks accused Transgrid of poor maintenance. “Local power workers have long said Transgrid’s willingness to gamble with Broken Hill’s power supply was a disaster waiting to happen — and now it has happened.”
He said Transgrid had scheduled less frequent maintenance work, “which means more events like this are possible”. He accused the company of “greed and incompetence” and said this was putting the lives of the people of Broken Hill at risk.
Hicks said Essential Energy and Transgrid workers from all over the state have been helping get power back in Broken Hill.
NSW Greens spokesperson Abigail Boyd MLC said on October 29 she had heard reports of the network infrastructure “practically disintegrating”. She said Transgrid made more than $1.12 billion in the last financial year.
“The ranks of executives continue to explode, alongside their pay packets, while apprentice numbers are practically nonexistent.” Meanwhile, real wages of Transgrid workers have declined by 10.3% since 2015.
The Greens want a parliamentary inquiry into the “circumstances of this colossal failure”.
Economist John Quiggin said on October 29 that governments cannot escape responsibility for delivering essential services, such as electricity, even in a fully privatised system.
In the South Australian 2016 black-out, a system failure, the government “re-entered the electricity business” and sought Tesla’s help to construct the world’s first big battery.
As responsibility for energy is shared between private transmission, distribution and generation companies, the Australian Energy Market Operator and the Australian Energy Regulator, this fragmentation makes the energy market “more prone to failures”.
Quiggen said all aspects of the market system need to be reconsidered “beginning with the privatisation of monopoly assets, such as transmission and distribution”.
He said the market system had failed and that “returning these assets to public ownership would allow for a return to a more integrated electricity supply industry”.
His view is that the public operator would continue to own the poles and wires but the mix of “base load”, “peak” and “reserve” energy supply market “would be partially replaced by long-term power purchase agreements”, which included an obligation on private companies to provide continuity of service and system stability.
While Quiggin is not arguing for public ownership of the essential service, he did say that “re-nationalisation is perfectly within the financial capacity of Australian governments” because it is a “low-risk” asset.
The record, however, speaks for itself: NSW governments should never have sold publicly-owned power assets.
As Hicks said of the Broken Hill power failure: “This is what happens when you outsource essential infrastructure to a private company that cares more about its bottom line than actually delivering for the people …
“It is highly unlikely that with a properly maintained system we’d be in this situation. This isn’t a case of bad luck — this is a case of incompetence and calculated greed.”