Energy sector unions throw oil onto fire

Well, well – where’s Sir Joh when you need him?

Whilst busy working on other developments to keep our many and varied paying customers happy, one of our canny WattClarity readers alerted me to this Market Notice from yesterday evening talking about likely industrial action at Loy Yang A power station – taken from NEM-Watch:


Talk about pouring oil onto a blazing fire…

No sooner have the COAG Energy Ministers disbanded from their chinwag (and photo opp) session yesterday will they be considering re-convening to address the latest emerging risk to security of supply (one I noted here as a potential game changer).

Here’s one view of AEMO’s MT PASA forecast for the next 12 months showing aggregated generation capacity scheduled to be made available in the Victorian region of the NEM:


For those not familiar, scheduled generators have to indicate to the AEMO how much capacity they are planning to make available to the market (at any price) each day for the next 2 years.  The AEMO stacks these up and updates every 3 hours.  In the ez2view chart above, we highlight the current run (from 09:00 today) and compare this with the one from 18:00 yesterday (i.e. prior to the announcement).

What the AEMO does then is compare this available capacity with what they expect the demand might be to produce a daily figure for Surplus Capacity (with the general idea being the higher the surplus the more secure the supply, and also the lower the price).  It’s obviously dependent on what the demand actually turns out to be, but gives a useful guide as to the relative risks on each day over the period.

Here’s a view (again from ez2view, this time in Forecast Convergence) of how this forecast of Surplus Capacity from MT PASA has changed over the past 2 years – each row a separate weekly forecast.  I’ve highlighted the step change following the Hazelwood closure announcement, however it does not yet* reflect the effect of the Industrial Action at Loy Yang A :


*  the effect of the industrial action is not yet shown as these forecasts are only updated once each week (on Tuesdays) – hence we’ll have to have a look next week for an update.

Now it must be said that the Christmas period will be one of lower demand, and that Hazelwood is still running for another few months – hence the risk of “lights going out” is low if the industrial action is of short duration.  However one does still wonder – with Brown Coal generation businesses facing terminal decline, how does such an audacious plan actually represent the interests of the workers at the plant?

Are they smoking the stuff down there, rather than burning it in the boilers?

I’m pretty sure the soon-to-be-redundant workers at the neighbouring Hazelwood plant would be all too happy to swap jobs with those workers at Loy Yang A who evidently want a longer Christmas holiday (in fact, perhaps that is part of the plan the unions have in mind in a “young for old” swap).

One might wonder if the Unions have a suicide mission in mind?

Another example of unions playing Russian Roulette with our electricity supplies (i.e. following the risk of action at Longford, since averted)?  This is a situation far too familiar for those with long memories of the SEQEB workers dispute of the 1980’s – and we all know how that ended…

I can already hear the responses from those on the green/left of the energy debate, using this as an argument for the risks inherent in large, centralised (and heavily unionised) production facilities, which in this case just happen to burn dirty brown coal.

The moves by this unionised workforce will only work to hasten the demise of Loy Yang A – and where does that leave the employees (and union members)?  Redundant, but perhaps with a bigger redundancy payout by virtue of these high-stakes moves.

PS – another astute WattClarity reader has posed the question of what this means for next door Loy Yang B, given that the same mine (which will be affected by the industrial action) supplies both, and from a common bunker, I believe.  Does it mean that a mine stoppage will take out both?

What game are these union heavies playing, one does wonder…

PPS at 14:25 – it gets much worse.  See below the latest run showing the effect of the capacity of Loy Yang A being out for the whole of 2017.


No apparent mention of Loy Yang B, though… (though I do see it in this article on the AFR)

PPPS at 15:41 – if that was worse, than this is dire.  See below a more updated run, which shows another 980MW of capacity coming out from 28th December through until 17th March. This suggests perhaps Loy Yang B, as well?


I also note that this article in the Age today is growing in length, and now notes that:

“The Andrews government quickly responded on Thursday, stepping in to terminate the actions from both sides due to the risk of significant damage they posed to the economy. Industrial Relations Minister Natalie Hutchins launched the application to the Fair Work Commission.

‘This will force both parties to get back to the table to end this dispute and the Fair Work Commission is the appropriate place for this to occur,’ she said.

The government’s request could cause the tribunal to intervene and force the long-running dispute to be settled without negotiation.”

PPPPS at 16:30 – strike has been called off?

According to ABC news, the strike has been called off:


One does wonder – what has been achieved, for the CFMEU, other than to stick a big target on its back (and the back of Bill Shorten, by association) with respect to Industrial Relations reform…

Several days elapsed, during which time comments were added below.

PS on Wednesday 21st December – ETU calls for strike now

According to articles in the Age yesterday (here and here) the ETU is now calling for a strike on Christmas Day.

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

2 Comments on "Energy sector unions throw oil onto fire"

  1. “What game are these union heavies playing, one does wonder…”

    Gotta get the redundancy payouts fully bedded down with all these Labor/Greens about. Sort it now or we’ll give the punters a bigger taste than SA of what you’re up to with all your unreliables.

  2. Paul McArdle,

    I’m rather disappointed at the one sided comments from you about workers when it was actually AGL that threatened Victoria’s electricity supply by stating they would lock out all workers, even those not involved in the 14+ month dispute.

    The real threat to the Energy Market and the Government’s quick response came from AGL’s escalation of a dispute and a lack of reserve in the NEM to cover an individual company decision to not just lock out the Power Station workers, but also the Mine Workers which are not even involved in the dispute.
    AGL’s decision to lock all workers out was simply done to cause an AGL induced coal supply shortage to ENGIE’s Loy Yang B station. This was a legal manoeuvre to affect a 3rd party company, so as to force an arbitrated outcome rather than negotiate in good faith bargaining.

    I’ll repeat the workers view, that it has been 18 months, where ALG would not even meet with the unions to negotiate. For this to be the first threat of industrial action from the CFMEU after the 14+ months lack of good faith bargaining by AGL. It’s very rich of you to side with the Boss.

    Maybe you should stick to the facts and not speculation, like you normally do. Basking the workers and insinuating they are smoking something and want a longer Christmas break is hardly impartial considering that it wasn’t balanced with comments about expected multi million dollar profiteering by the remaining generators. I would have thought by now that you especially would know that the electricity generation sector is a 24/7 365 day a year operation and that each and every shift worker has spent many a Christmas Day, Easter and public holidays at work and away from their families.

    By the way, the AGL workers have all voted for “Protected Action” as they are entitled to do under the FairWork Act, in a secret ballot run by the Australian Electrol Commission (AEC). The protected action bargaining order (PABO) was a request from the power station workers and the CFMEU represents its workers as requested, especially when there appears to be no end in sight.

    Contrary to the AGL propaganda the dispute is not over pay raises, it is all about job security, as AGL wants to cut worker numbers as evidenced by their forced redundancy clauses.

    You should really be reporting about how all the Generators are simply looking to game the market and maximize their profits at the expense of all consumers.
    ENGIE owns Pelican Point Gas, Hazelwood and Loy Yang B, so when they close Hazelwood they are looking to make a killing from the market. Some of the Hazelwood Units could run until 2020,2019,2019 and 2018 without any extra expenditure but are being shut down for profiteering and ideological reasons, without a second thought for the Workers, Latrobe Valley Community and consumers.

    To put the announced closure into perspective, ENGIE hired young workers 2 years ago and promised the a job until 2025 with a potential of 2033.
    ENGIE’s previous announcement of redundancy payments were a negotiated requirement of the EBA they signed 2 years ago and not a cent more was offered.
    I’m one of those directly employed 500-750 Hazelwood Workers that are about to be made redundant in March because of this corporate profiteering.

    How about you stop the union bashing and look at the problem for what it is, a political football between State and Federal Governments all based around the Generators manipulating the AEMO/AEMC rules for maximum benefit (To the shareholders of course).

    I for one appreciate your more impartial and fact driven articles, that’s why I read and often refer people to rather that the one sided reneweconomy bullshit.

    I hope you take my criticism constructively and aim to deliver more facts than speculation.

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