Delays to Queensland Power Station’s Repair Risk Inflating Electricity Prices

Electricity poles in Queensland town of Ayr, Australia, on March 27, 2017. Peter Parks/Getty Images

A major coal-fired power station in Queensland has experienced a delay in repair, which is likely to stretch electricity supplies and prices in the state at a time when an energy crisis is sweeping Australia.

On March 8, Queensland-owned CS Energy announced an extension to the return to service dates of two generation units at the Callide C power station.

As a result, the 1,540MW power plant, which supplies around 30 percent of the state’s electricity needs, will not return to regular operation until next year.

Callide C has been operating below its capacity after an explosion destroyed one generation unit in May 2021, while another unit went out of service due to a cooling tower failure in October 2022.

New Return to Service Dates for Generation Units

The power station’s C3 generation unit, which was previously expected to go online by June, now has its return to service date postponed until the end of 2023.

Similarly, the C4 unit’s regular operation schedule has been delayed from May 2023 to January 2024.

The energy company cited the need to build cooling towers on both units as the main reason for the delays.

“The change in return to service dates reflects CS Energy’s support for rebuilding both cooling towers,” the company said in a statement.

“CS Energy’s position is based on a scope of work incorporating both cooling towers and tenders CS Energy has received from contractors. We are currently working this through with our JV partner.”

The company said the changes were “not unusual” for units undergoing major repairs, saying it all depended on issues identified during the process.

Paul McArdle, the managing director of specialist firm Global-ROAM, said the outage at the Callide C power station was the longest since the National Electricity Market’s establishment in 1998.

“I’ve not checked detailed stats since the start of the NEM, but believe this would make it the longest outage in the history of the NEM (i.e. two years and five months from the initial unit trip),” he wrote in an article.

“This might be longer even than when some Tarong units were mothballed for a period of time during the oversupplied years.”

Following the announcement, the future wholesale electricity prices for April to December in Queensland jumped by $10-$15 (US$6.5-US$9.9) per megawatt hour, sparking concerns about whether energy companies will pass the rises onto households and businesses in the state.

In later February, Queensland Energy Minister Mick de Brenni reassured the public that the state had sufficient generation capacity to satisfy the rising demand of households and businesses even with the shutdown of some power stations due to repair and maintenance.

Electricity Prices Are Expected to Soar by 20 Percent

The delay at the Callide C power station comes as the CEO of Origin Energy has warned that electricity prices could go up by as high as 20 percent after July 1.

Speaking at the Australian Financial Review’s Business Summit, the boss of the energy giant shared his grim forecast ahead of a change to the default market offer–the maximum price cap electricity retailers are allowed to charge consumers–in the coming days.

Origin Energy CEO Frank Calabria delivers a keynote address at the Committee for Economic Development for Australia, in Sydney, Australia, on Oct. 25, 2019. AAP Image/James Gourley

“I would just reiterate that (the price increase) is, in fact, recovering costs that were incurred by the industry, which, if we cast our mind back to May and June, certainly put the energy system under pressure,” Calabria said, reported The Australian.

“Nevertheless, it’s going to be a contributor to costs of living, which we’re acutely aware of in terms of our customer base and supporting those that are less able to pay.”

The change to the default market offer is expected to impact consumers in New South Wales, Queensland and South Australia.

Calabria also noted that consumers might not see much relief this year despite the coal and gas price caps introduced by the federal government in December 2022, saying it would take some time for the effect of the policy to flow through to consumer prices.