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Supply

Supply security

Electricity

Future electricity supply is the responsibility of the Electricity Supply Industry Planning Council (ESIPC). For further information refer to the web site http://www.esipc.sa.gov.au

At the national level the National Electricity Market Management Company (NEMMCO) is responsible for determining the adequacy of future supply, and maintains a reserve margin of generating capacity above predicted demand. Each year NEMMCO publishes supply scenarios for the national market in the Statement of Opportunities. For further information visit the NEMMCO web site at http://www.nemmco.com.au

Gas

The greater part of the State’s demand for natural gas is sourced from the Cooper Basin in the far north-east of the State and extending into south-west Queensland. This gas is processed through the plant at Moomba and transported through the Moomba to Adelaide pipeline system (MAPS). A failure in operations in the fields, the plant or the pipeline could have a serious impact on the operations of the State. However, with the construction of a second pipeline from Western Victoria (See below) supply security will be enhanced.

Approximately one-third of the State’s demand for electricity is supplied from gas-fired generators. Any disruption in the flow of gas may also impact on electricity supplies.

An interruption to the supply of raw gas to the Moomba Plant through a field problem is unlikely to impact on the supply of gas to the State. The Producers will be able to bring on additional fields or withdraw gas from storage to meet the demand.

Failure within the Moomba Gas Processing Plant could severely impact on the supply of gas to the State, depending on the location and nature of the failure. The ability of the Plant Operators to withdraw gas from underground storage at Moomba and deliver that gas to MAPS without passing the gas through the Plant provides some delivery of gas and lessens the impact on the SA market. Raw gas from the Big Lake field is of such composition that it may be directly mingled with gas from storage, thus increasing the quantity of gas available to the market. The Plant operators are currently increasing the quantity of gas stored at Moomba as a contingency plan against plant or field failure.

When full of gas, MAPS contains sufficient gas to supply the SA market for 1 – 2 days, provided those industrial customers with interruptible contracts for supply stop using gas and other industries, where possible, revert to alternate fuels. Torrens Island Power Station (TIPS) is able to burn fuel oil, for a limited time, in place of natural gas to relieve the pressure on the demand for gas. Where a short term failure to the gas supply occurs upstream of the (MAPS) transmission line, gas supply can continue to be delivered to the markets with little disruption.

Where a disruption occurs in the transportation of the gas (ie. Through MAPS), Epic Energy can quickly isolate the relevant part of the pipeline to initiate repairs. Repairs to the pipeline can generally be undertaken with minimal disruption to the overall supply of gas. Interruption to supply to "interruptible" consumers where possible and the use of alternate fuels will again minimise the impact of the disruption on the gas consumers.

Origin Energy Asset Management Limited (OEAM), operators of the distribution systems downstream of MAPS, are able to isolate sections of the system in which a failure occurs. This localises the impact on the consumers.

In consultation with the gas industry, the Energy SA has developed administrative procedures to be used to address a shortfall in the supply of gas to end-users. The authority to ration available gas is provided under the Gas Act 1997. The Minister has the authority to direct certain consumers not to use gas and to issue a direction as to the quality of gas suitable for distribution. The procedures ensure the safe disconnection, and subsequent reconnection, of consumers and that essential services continue to have access to natural gas for as long as possible.

As indicated above, restricting gas to end-users cannot be made in isolation of the need for electricity generation. Arrangements are in place to ensure that any assessment of gas load shedding is based on the prevailing energy market conditions at the time with a view to achieve the best possible outcome for the good of the State.

The current Gas Sales Agreements to which the Government is party with the Cooper Basin Producers expire at the end of 2005. Each of Origin Energy and Terra Gas Trader have their own separate agreements with the SA Producers for a quantity of gas for a period extending beyond 2005. However, current indications are that further sources of gas must be identified and agreements in place by around 2005/06 to satisfy the forecasted demand. Several options are identified below.

The proposed Papua New Guinea to Gladstone (Qld) gas pipeline, the already commenced Gippsland to Sydney pipeline and the options of connecting Mt Isa to the Alice Springs to Darwin pipeline or the Mereenie (Northern Territory) fields to Moomba provide suitable sources of gas to the State. Additional gas from the south-west Queensland Cooper Basin is also a viable source for future supplies.

SEA Gas Pty Ltd and TXU have commenced the construction of a 680 kilometer underground natural gas pipeline between Port Campbell, Victoria and Pelican Point, South Australia. SEA Gas is a consortium including Origin Energy (owner of the Quarantine power station) and International Power (owner of Pelican Point power station). TXU is the owner of the Torrens Island power stations. The $500 million project will provide an alternative source of natural gas to the Moomba-Adelaide pipeline, and have a potential capacity of 125 petajoules. The pipeline is due for completion in early 2004. The security of supply and competition resulting from the two sources of supply should assist competitive pricing of electricity in the medium term.

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