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SA looks to push power prices down

AAP logoAAP 8/09/2016

South Australia is looking for a new power generator to try to increase electricity supplies and drive down prices for consumers.

The government will put 75 per cent of its long-term power needs out to tender, hoping to entice a new competitor into the energy market.

The contract could go to a supplier of renewable energy, such as the proposed solar thermal power plant in the state's north, but could also go to a company proposing to develop new gas-fired electricity generation.

The government will also commit $24 million to encourage companies with existing gas reserves in SA to bring that gas to market, with local companies and consumers to be supplied first.

Premier Jay Weatherill says it's hoped the two measures will boost power supplies and through increased competition, drive down prices.

"Of course I can't guarantee anything in what is essentially a private market that we don't control," Mr Weatherill told reporters on Thursday.

"But what I can do is act on the basis of the best advice we have and that is if you increase supply, you drive down prices."

The government's current electricity supply contracts, which cover the power need for schools and hospitals and the like, are due to expire around the end of this year.

Energy Minister Tom Koutsantonis said the government's moves to boost gas supplies could also help cut prices, by offering incentives to companies with reserves to bring them online now rather than wait until they would be more profitable.

"There is a lack of available gas in the national market, a situation made worse by the decision in Victoria to ban onshore conventional and unconventional gas exploration and development," he said.

"Gas is an important transitional form of energy generation that works in tandem with renewables, providing base-load power to stabilise the system as more renewables come on line."

As well as its move to increase competition, the SA government has reaffirmed calls for changes to the national electricity market.

It says South Australia needs stronger physical links to the national grid to allow it to increase its supply and sale of wind and solar power.

The South Australian Chamber of Mines and Energy said the incentives to boost gas production come at a time when increasing costs and lower oil prices have cut gas exploration and production.

It said the government's announcement would encourage innovation and reduce gas production costs.

"Lower cost and more plentiful gas will directly benefit all gas users and indirectly benefit all electricity users," chamber chief executive Jason Kuchel said.

But the South Australian opposition described the proposal as "half baked" and indicative of a government that had no idea how to drive down power prices.

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