Temperature rising over power plant output cuts
The industrial action reduces the electricity the plant's owner - EnergyAustralia - can sell into the market, although the nation's market regulator maintains power supplies have not been affected.
EnergyAustralia will on Tuesday seek court orders to end the action and wants compensation for the electricity it has not been able to sell. Hot days usually generate the highest demand for energy because more people use airconditioners.
Members of the Construction, Forestry, Mining and Energy Union have been using a manual override to reduce output at four generators between 4pm and 6pm each day since March 1.
This reduces output to 240 megawatts per generator, down from 360 or 392 megawatts, depending on the generator. The action is a protest against enterprise agreement negotiations.
EnergyAustralia spokesman George Svigos said the generator would seek to restore the output of Yallourn. "We are taking the steps open to us to protect our business from losses.
"We are working through the issue of financial impact, but clearly reduced output at times of higher demand has had and will continue to have real cost implications for our business," he said.
Despite demand peaking on hot days, the industrial action is unlikely to cause brownouts or blackouts due to an oversupply of electricity.
"The amount of available reserve is greater than the capacity of Yallourn," said an Australian Energy Market Operator spokeswoman.
EnergyAustralia was warned on February 25 the industrial action would last "for an indefinite period". It has filed a writ seeking damages and orders restraining CFMEU members or their agents from reducing electricity output.
The Supreme Court of Victoria heard the matter on Friday and is expected to make a decision on Tuesday morning.
Commissioner Michelle Bissett of the Fair Work Commission declared on February 21 that the CFMEU's action was protected under the Fair Work Act. This was because the CFMEU had given EnergyAustralia enough notice and information about the action that it had an opportunity to avoid it.
Frequently Asked Questions about this Article…
Union members deliberately reduced electricity output at the Yallourn power station during the hottest parts of the afternoon as Victoria experienced a record heatwave. The industrial action has cut the amount of electricity the plant's owner, EnergyAustralia, can sell into the market.
Members of the Construction, Forestry, Mining and Energy Union (CFMEU) are responsible. They have used a manual override to reduce output as a protest against enterprise agreement negotiations with EnergyAustralia.
The action reduces output at four generators to 240 megawatts per unit between 4pm and 6pm each day. That is down from about 360 or 392 megawatts per generator, depending on the unit. The cuts have been in place since March 1.
According to the market regulator (Australian Energy Market Operator), the industrial action is unlikely to cause brownouts or blackouts. AEMO says the available reserve is greater than the capacity of Yallourn and maintains power supplies have not been affected.
The reduced output lowers the volume of electricity EnergyAustralia can sell during peak demand periods. EnergyAustralia says reduced output at times of higher demand has had and will continue to have real cost implications for its business, and it is working through the financial impact.
EnergyAustralia has filed a writ seeking damages and orders restraining CFMEU members (or their agents) from reducing electricity output. The company planned to seek court orders to end the action and wants compensation for electricity it says it has not been able to sell. The Supreme Court of Victoria heard the matter and was expected to make a decision the following Tuesday morning.
A Fair Work Commission decision by Commissioner Michelle Bissett on February 21 declared the CFMEU’s action protected under the Fair Work Act, because the union had given EnergyAustralia sufficient notice and information about the action and an opportunity to avoid it.
Investors should watch the court outcome and any company announcements about financial impacts or compensation claims, since EnergyAustralia has argued the cuts affect its sales at peak times. Also monitor market operator updates about reserve margins and supply reliability; AEMO has said reserves exceed Yallourn’s capacity and supply had not been affected according to the article.
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