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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

the politics of power « Previous | |Next »
February 24, 2004

I see that Alan Moran from the IPA has an article on electricity in the Australian Financial Review (subscription required, 23 02 04, p. 63). The IPA has little credibility in environmental policy making circles these days, so I was curious to see what Moran had to say beyond the usual shooting rubber bands at Platonic fictions for a fee. They have a brief. and act like lawyers for a client.

Moran starts well enough. He says the issue raises questions about:


".... the appropriate role of government. Is it the servant of the people or is the master and of the people?"


I take it for granted that citizens don't exist for Moran. Still he raises a reasonable question. A question with only right answer. The government should be the servant of the people.

Moran answers the question in a roundabout way. He says that:


[Canberra's] "... Mandatory Renewable Energy Target [MRET] is forcing an increase of $350 million per year in electricity prices....Canberra is resisting calls from the green lobby for a further expansion of the renewable energy targets."


So the government should refrain from doing those things that would increase prices. That is very bad governance. An example is the subsidy of the MRET by the Carr Government in NSW. This is bad because increasing prices because of the need for new investment in electricity infrastructure:

"The Victorian government is....aware that the state will require new base-load electricity plant in the next few years, investment that will be discouraged if it foists additional costs on industry."


If industry doesn't invest in new infrastructure then consumers have blackouts. Look what happened to WA last week.

However, the green policies of the Brack Government will increase the costs for the electricity industry. The Government is:


"...demanding additional carbon-dioxide emission targets for the LaTrobe valley Hazelwood power station as a condition of planning approvals. These would reportedly cost Hazelwood's owners about $250 million."


That's bad. Real bad.

So government should not do anything to increase the costs to industry to meet the demands of the green lobby. Consumer sovereignty requires cheap power. So the government be the servant of consumers who are the people.

Impeccable logic you might say. The free marketeers would say true, so true. Moran nails it once again. The greens are skewered yet again. Moran is our boy. Yeah yeah.

One question. Why is it good for the national electricity market--- the electricity industry--- to raise electricity prices by 25-30% for consumers in South Australia? Was that not the result of the free market? Are not energy companies making big profits by withholding power at peak periods to drive spot prices through the roof? Is that not bad too?

Oh, is not an increase in MRET a significant way for Australia to encourage the development of a $1 billion renewable energy industry? And that is bad?

As I said the IPA are presenting a brief. The clients are the energy intensive industry.

| Posted by Gary Sauer-Thompson at 6:45 PM | | Comments (2)
Comments

Comments

Too true. The tariff negotiated between EPIC (energy) and the WA government was not good enough for the former. The firm underinvested in repairs and capacity for the gas pipelines. Thus WA's major source of energy was unable to meet demand.

The WA government stuffed up, and must redeem themselves.

Steve,
Why just the WA Government?

Why not the firm as well?

Did they not pay too much for the assets and not have money to repay debt and investment in the gas pipelines?

Why is that the WA Government's fault?