Transgrid, ETU fight leaves generators stranded and power prices under pressure

A bitter industrial row between electrical workers and the company that owns the high voltage power lines in New South Wales is spilling into the electricity market amid claims of stranded generators and rising wholesale prices.

Matt Murphy from the Electrical Trades Union said "heaps" of generators had been left offline in recent months as workers escalated their fight against Transgrid, the private firm that owns the transmission network in Australia's most populous state.

Among them are believed to be one of the units at the giant Eraring coal-fired power plant in the Hunter Valley along with a raft of renewable energy projects waiting to be connected to the grid.

The dispute is also understood to be a risk for the commissioning of the Waratah Super Battery, which is being built by the NSW government to help replace retiring coal-fired capacity and prop up an increasingly shaky electricity system.

Some of the generating units, including at Eraring, have since been returned to service.

NSW Energy Minister Penny Sharpe declined to comment.

But Mr Murphy, the national industry coordinator for the ETU, was more forthcoming, saying the NSW transmission network was being "degraded" the longer the stand-off with Transgrid lasted.

And he said the pain was unlikely to end any time soon as workers imposed an effective ban on connecting new generators or reconnecting existing ones taken offline because of outages or maintenance.

"The network has been hugely degraded," Mr Murphy said.

"They have a number of lots of infrastructure that they degraded through lack of maintenance.

A lock without a key: ETU

At the heart of the matter is a fight over money.

The ETU is seeking increases in pay of 6.5 per cent a year for three years along with a one per cent bump in superannuation contributions for the period.

Transgrid has offered workers 14 per cent over three years, including a one per cent increase in superannuation.

According to Mr Murphy, Transgrid was trying to circumvent the ban by using third party labour but it was not nearly enough to prevent major delays for affected generators.

"A lot of the renewables people are waiting for connections and that's banned at the moment," he said.

"They've got a couple of people running around who aren't union members who are doing some of that work, and they are helicoptering them around to do that.

"And a lot of the stuff we do is we will agree to do some work, take some equipment out of service, we'll then do all the work that's required to maintain it, then refuse to put it back in.

"A lot of that going on as well."

Workers are expected to vote on the proposed pay deal later this month.

A spokeswoman for Transgrid acknowledged the stoush with the ETU was flowing through to some of the network's customers but said the company was doing everything it could to resolve the situation.

Transgrid 'aware' of effects

The spokeswoman would not be drawn on which projects had been or were being affected but noted Transgrid was trying to help them where it could.

"We are aware of the impacts on our customers and we are working to assist them wherever possible," the spokeswoman said.

"We appreciate their patience and understanding while we work with our people and the unions to find a solution that does not result in an unreasonable burden on energy consumers.

"Our team remains focused on providing a safe, affordable and reliable electricity for those consumers.

Not everyone was as assured.

Josh Stabler from research firm Energy Edge said significant grid connection delays were a big risk for new renewable energy projects.

Mr Stabler said investors in those projects were often relying heavily on being able to generate power by a certain date in order to start repaying their debts.

Anything that hampered that, he said, could be the difference between viability and something far worse.

"New entrants joining this market who are very reliant on this working and are unable to access the market … that is destroying them," Mr Stabler said.

"That's where the danger is.

Meanwhile, prices are rising

Last week, market analyst Dan Lee from Global Roam noted that wholesale electricity prices in all eastern states bar Queensland had jumped in the three months to June 30.

In NSW, prices climbed 26 per cent compared with the same period last year to $173 a megawatt hour — a level for the quarter exceeded only in the teeth of the energy crisis two years ago.

Mr Lee said the high prices and volatility in the quarter were becoming a pattern for that time of the year as the power system moved away from fossil fuels and towards green energy.

Among the causes of the price rises, he suggested were network outages … particularly in NSW as well as several wind lulls that formed a 'wind drought', and disruptions to gas supplies.

Mr Stabler said the disruptions to the Transgrid network were unlikely to have had a major effect on wholesale prices during the second quarter.

But he also noted they weren't helping — in more ways than one.

"In terms of the electricity market outcomes, you would anticipate that these delays are far more influential to the individual investment and the investment community than they are to the market."

The Clean Energy Investor Group, which represents deep-pocketed backers of green power projects including investment bank Macquarie Group, said there was an urgent need to break the impasse.

Acting chief executive Marilyne Crestias acknowledged that badly needed renewable energy projects were being affected by the industrial dispute.

She said anything that could put a stop to the disruption and get projects connected quickly was welcome.

'Urgent' breakthrough needed

"There is an urgent need to build wind, solar and storage assets and connect them to the electricity grid to replace Eraring," Ms Crestias said.

"CEIG supports the negotiation of fair working pay and conditions for workers and also encourages both parties to work towards a mutual agreement so that we can avoid major delays in connecting new plants that are ready to generate low-cost electricity for consumers."

The dispute with the ETU is another headache for Transgrid, which is also dealing with cost and time blowouts on its flagship project, the $2.3 billion Project Energy Connect linking NSW to South Australian via a high-voltage power line.

It has been reported that spiralling costs on the troubled project were to blame for the poor financial performance of Elecnor, the Spanish firm brought in by Transgrid to finish the line when previous contractor Clough went bust.