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Electricity: whose pocketing the benefits? « Previous | |Next »
November 26, 2003

There is a report in today's Australian (not online) that says electricity prices in South Australia are to be reviewed by a Parliamentary committee. The Advertiser says that the review would be an Upper House select inquiry into all elements of the electricity market in SA.

There needs to be one. SA was meant to be a major beneficiary of electricity reform through accesssing the surplus energy from states (Queensland and NSW) that generated a surplus when its own generators could not meet the demand.

There have been reductions in wholesale price of electricity. Nigel Wilson, in an article in The Australian says:

" ....most of the benefits of greater competition in the electricity sector caused by deregulation have been captured by the power generators and those that operate the transmission and distribution sectors. There is precious little left of the competitive gains to pass on to household consumers."

Will they SA politicians inquire into themselves? In the 1990s the SA politicians embraced national competition policy and energy industry reform, but today they are unable to live with the consequences.

SA is a microcosim of the national electricity market. It's not working. Nigel Wilson says:

"That the national electricity market is not working as expected is demonstrated by the fact that more than $8billion of Australia's energy assets are up for sale - including Victoria's biggest power station Loy Yang B - because returns from the partially privatised system are not as high as the owners anticipated or were promised by state government sellers. "

Since returns are not high, so there is little private money going into investment in the desperately needed new infrastructure. So the real problem is that there is not enough deregulation. We need more deregulation. Lots more. Why, there are signs that benefits from the national electricity are flowing. So argues The Australian. It says that across "Australia, household electricity prices actually fell by up to 7 per cent in the decade to 2001." According to this business view of the world the problem of rising electricity prices in SA can be laid at South Australia's door:

"South Australia has been too hesitant about splitting up the former state-owned monopoly into small enough pieces to foster competition. Private companies paid too much for the "wires" businesses, transmission and distribution, and that is now being passed back to consumers. And because South Australia does not have the infrastructure of NSW or Victoria, shortages create an imbalance between supply and demand, driving up prices."

And the solution is so very simple, opines The Australian:

" is a national electricity market where generators compete with each other to supply electricity into a single grid ... In such a market, South Australians would be taking advantage of excess generation in NSW and Victoria. But all this has proved elusive. Overlapping regulatory fiefdoms in each of the states have scared off investors, with the result that South Australia has neither the capacity to meet its own needs, nor the additional interconnector needed for it to tap in fully to the national grid. What we need is a national market and a single regulator. Follow that with smarter meters that allow discriminatory pricing between peak and off-peak usage, and an end to the hidden subsidising of rural consumers by metropolitan ones."

A wave of the magic wand and its utopia. There is no need to talk about the ecological sustainability of the national electricity market generating electricity from coal fired power stations. Nope, that's a distraction from the main game.
It is reported in today's Advertiser that "South Australians are struggling to pay rising power bills for a less reliable supply and worse customer service." So much for the broad rule of national competition policy to ensure that consumers benefit from competition and efficiency in the energy industries. Jus the opposite is happening.

| Posted by Gary Sauer-Thompson at 2:45 PM | | Comments (0)