Upcoming Events:

8th April 2011 –  Valuing Power Plants with Spark Spread Options

Recent Events:

22nd March 2011 - Optimization at Work: From Market Design for Emission Trading Schemes towards Robust Risk Measures (Prof. Hans-Jakob Lüthi)

9th March 2011 – Inaugural Seminar – An Industry Prospective

Note that TTA is currently hosting PREEM web postings and email notifications on a temporary basis until University resources are set up to do this.

The seminar was very well received with positive feedback received from many who attended. At this stage, PREEM are planning to conduct a seminar such as this one on an annual basis.

The seminar, ‘An Industry Prospective’, featured a number of top speakers from the industry. Their presentations are listed below, for viewing or download.

Dean Price – Electricity Futures and Options (1.3 MB)

Alex Georgievski – Green Commodity Costs (803 KB)

Prof. Paul Simshauser – Boomerang Paradox (397 KB)

Ben Vanderwaal – Delivering Reliability of Supply (840 KB)

Dr. Alex Radchik & Dr. Igor Skryabin – Solar Derivatives (1.9 MB)

The original program and list of topics can be found here.

Note that TTA is currently hosting PREEM web postings and email notifications on a temporary basis until University resources are set up to do this. For the latest PREEM news including presentations of past events, please visit the PREEM index page.

PREEM Inaugural Seminar

Welcome from Prof. Erik Schlögl, director of QFRC

Prof. Alex Novikov introduces PREEM

Dean Price speaking on the Futures Markets

Alex Georgievski speaking on Green Commodity Costs

Prof. Paul Simshauser speaking on Fuel Poverty

Ben Vanderwaal speaking on Reliability of Supply

This event was made possible due to these event sponsors

Dr. Alex Radchik speaking on Solar Derivatives

In order to mark the establishment of this Program, the QFRC is inviting industry participants, academics and others to  its inaugural seminar  ’An Energy Industry Prospective’ on Wednesday, the 9th of March. Confirmed speakers from the industry include Professor Paul Simshauser (Chief Economist & Group Head of Corporate Affairs, AGL Energy Limited), Ben Vanderwaal (Managing Director, ROAM Consulting Pty Ltd) and Dean Price (General Manager, d-cyphaTrade).

More information can be found at http://www.qfrc.uts.edu.au/energy/prospective.html

To RSVP, please contact Caroline Dobson, Ph. 9514 774

Trading Technology Australia is proud to support this Program.

Origin Energy are cleared to purchase:

• EnergyAustralia;
• Country Energy;
• Integral Energy; or 
• both Country Energy and Integral Energy

together with one of the Eraring, Delta Coastal or Delta Western gentrader bundles and one of the generator development sites.

The ACCC also announced that it would not oppose the acquisitions by AGL of Country Energy or Integral Energy together with one of the Eraring, Delta Coastal or Delta Western Gentrader bundles and one or more of the generator development sites.

The ruling makes no mention of Gentrader contracts for Macquarie Generation’s capacity. Yesterday The Australian reported that “…none of the main bidders – AGL Energy, Origin Energy or CLP Holdings’ TRUenergy – lodged bids for the right to trade output from the Macquarie Generation plants.”

The latest plan has ETEF being phased out between 1 July 2010 and 30 June 2011, with a quarterly 20% roll-off. The exact dates of the roll-offs have not been specified.

Most recently, ETEF was set to run until June 2010, although the end of the scheme was left open-ended.

The new document, ‘Delivering the Strategy: approach to transactions and market structure’ details the updated plan including:

• The Gentrader contract durations will be set to the remaining technical life of the power stations;
• The Gentrader contracts will be offered in five bundles, two from Maquarie Generation’s current operations, two from Delta’s and one from Eraring’s;
• Generators will ‘pass through’ current fuel costs to Gentraders before switching to fuel tolling agreements to be managed by the Gentraders;
• Co-insurance arrangements will be used to offset losses due to outages;
• Incentive will be offered for Gentraders to invest in the plant;
• Periodic payments for the Gentrader contracts will be considered, although preference will be given to up-front payments;
• The retailers (EnergyAustralia, Integral Energy and Country Energy) will be sold as they are, although bidders will be able to bid separately for EnergyAustralia’s gas customers;
• Transitional services agreements will run for three years, with built in termination clauses;
• The retail brands form part of the asset being offered. The distribution networks will develop new brands;
• Development sites will be offered separately, but part of the same sale process. Munmorah will be offered as a Gentrader contract until its decommissioning, after which it will be offered for sale;
• Retail price regulation will continue to at least June 2013;
• ETEF will be extended until June 2011; and
• The Government will offer a ‘Consumer Protection Package’ including energy rebates and other assistance.

The most interesting part of the annoucement was the ‘plan B’ approach of merging Eraring, Integral Energy and the Bamarang development site and floating the entity via an Initial Public Offering. This approach would only be taken if the individual assets did not achieve acceptable bids in the trade sale process or if the sale process failed to facilitate ‘at least one new generation entrant’.

Four of the five original ETEF reduction dates have now been abandoned, the most recent in January (see earlier article ETEF Deferred Again which includes further information on the operation of the fund).

The change involves an amendment to the table in clause 2.1.1 of the Electricity Tariff Equalisation Fund Payment Rules. Interestingly, while Treasury have removed the September 2009 and March 2010 reduction dates, it has also removed the explicit 0% rate that previously applied from the 27th June 2010 onwards. Thus the rules no longer explicitly state that ETEF will not continue past 30th June 2010.

The review covered 26 NSW mitigation programs. In its response, the Government agrees with most of IPART’s recommendations.

The Energy Savings Scheme commenced on the 1st of July 2009.

IPART say that the new pricing ‘…represents an increase of around 21.7 per cent, 21.1 per cent and 17.9 per cent for regulated residential customers of EnergyAustralia, Integral Energy and Country Energy, respectively.’