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Electricity Crisis in SA « Previous | |Next »
February 11, 2003

Little bits of evidence indicate that energy companies use a shortage of energy to raise prices and make a killing. We have connected what is happening in SA to the California energy crisis to get a perspective on what is happening.

This article, How Reliant Energy Withheld Power from California Consumers gives some background to the Californian energy crisis. It indicates that we should not expect great things from the regulators of the national electricity market in Australia. Nor from the Federal Government. Their hands will be very light on.

So I read Allan Mitchell's article on the Parer Report into the National Electricity Market in the Australian Financial Review (12 Feb. p.62; subscription required) with interest. Entitled,"All Power to the Parer Report", it opens with:

"...we know from experience that energy reform is great when we get it right and disastrous when it goes wrong. California got it wrong. In Australia we have got it two thirds right. Householders in Sydney paid less in real terms for their electricity last financial year than in 1997-8, householders in Adelaide and Brisbane would have paid less if not for the GST, and business and farmers were ahead in most states."

Say that again about Adelaide? We have just had a 30-35% increase in electricity prices and rolling blackouts. How is that getting it right? Oh, because we are talking about the last financial year not the current one. Isn't that sooo so convenient. And note that Mitchell gives no reason for why California got it wrong, or whether California has anything to offer us in Australia.

What is it with these economists? On the one hand they say that economics is a science; on the other hand they ignore empirical evidence.

Now Mitchell does say that it is easy to spot the basic weaknesses of the present national electricity market. These are:

---not enough competition between generators;
---inadequate capacity in moving electricity within states;
---a failure to build enough interconnection capacity between the states;
---lack of investment at the point where the interstate interconections meet the state transmissions systems;
--at the retail end there is not enough competition and no real price signals;
---pollution--ie., the production of greenhouse gases.

Rest assured folks. The Parer Report has the solutions and so all be well. The Federal Government will get the competitive market to work efficiently in next to no time. Then things will flow smoothly.

Of course what is rejected iby Mitchell is sutainable energy---that trendy new technology stuff about wind & solar power and so on. These are uncompetitive. All that is necessary is a system of greenhouse emissions trading. The new renewable technologies can be left high and dry.

Thats the blueprint for the Rann Government. They will not have the political courage to break out of the neo-liberal straitjacket of the Parer Report.

| Posted by Gary Sauer-Thompson at 3:47 PM | | Comments (0)
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