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Electricity: pointing the finger where « Previous | |Next »
November 3, 2003

I have taken these comments by Observa from the comments box on the Screwing the Customer post. They should stand in their own right. They are insightful remarks on the issues of privatisation and competition that were supposed to make electricity cheaper in South Australia. We in South Australia have good reason to be angry about has happened, given the large increases in electricity prices out of the blue.

But where do we point the finger? Who do we trust? How did we get into this mess? Observa has some ideas on this.

Prof Dick Blandy of the Electricity Consumers Council was on the ABC TV today [Nov.1] describing why SA has the highest prices in the country. Essentially due to our heat wave air-conditioner demands in summer.Approximately 25% of our capacity is required for 5% of the year. Consumers have to pay for that privilege of course.

We got a look at a new smart meter that could alleviate much of this grid cost, by switching off air-conds on a rotational basis for short periods(15 mins every 2 hours). Electricity Ombudsman Lew Owens was against them on behalf of consumers, basically calling for business to cut its power use instead. Well of course business is prepared to pay the price. The meters would be voluntary, with discounts offered for consumers using them. The same benefits could accrue to business with timely shutdowns as well.

SA's particular power cost problem aside it was probably fair to say that power consumers Australia wide were in for some major price hikes, publicly or privately. The State Govts had generally bled their utilities as a tax milch cow, without costing in capital depreciation of aging plants. SA in particular is going through a massive period of investment in generation. Currently private investors are completing a major'apartment' development on the foreshore of Port Augusta to house workers for a 2-3yr period while the aging dinosaur Playford power station is renewed. This accommodation will essentially be paid for by rental to the workers in a tight regional accommodation market. It will then become a desirable motel, the first to be built in Port Augusta since the 70s I believe. Smart win-win by private enterprise which public servants couldn't even contemplate.

It is fair to say that when the Olsen Govt. touted privatisation of electricity as holding out cost benefits to consumers it was not telling the whole truth. What it really knew was that power prices would have to rise to reflect the new infrastructure costs required to meet burgeoning demand(as well as past goverment's neglect) Given the gun to the States heads from the Feds(Keating inspired if you recall)to increase competition or suffer funding cuts, what choice did the Olsen govt have? The truth was, these govts believed that competition would produce a lesser rise in prices than would have occurred under a continuation of govt monopoly. They just didn't have the guts to tell the electorate what they never want to hear.

Where are we now? Well we will never know whether or not ETSA would be giving us cheaper power than currently. However any of us who knew the good old days of feather-bedded employees of ETSA, SAGASCO and PMG (Telecom), laugh at the thought.

If you thought the likes of AGL and TXU are ripping us off blind then perhaps we'll let the doyen of the poor old consumer, the Rann Govt call it. They have just looked long and hard at the problem and have just decided that unfortunately their is no prospect of cheaper power in the short term (for this read the life of a power station). Exactly what they probably knew in opposition but were just as gutless in not telling us when they were busy scoring cheap political points.

Government business as usual folks! The good thing about privatised power last summer in SA was no blackouts. You just had to pay the true long term cost of power.

| Posted by Gary Sauer-Thompson at 1:50 PM | | Comments (0)