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Energy crisis & the media « Previous | |Next »
September 29, 2004

I saw Peter Beattie, the Premier of Queensland, on the ABC's 7.30 Report last night. He was doing his usual upbeat spin on the energy crisis in Queensland, which is starting to make him appear in a colder and harsher light.

It was deja vu. I'd heard similar lines in South Australia about the energy crisis. The energy crisis was due to the naughty behaviour of the bad energy companies. It had nothing to do with the state government.

For Beattie the crisis had nothing to do with Energex, the state owned utility, being required by the government to pay a big dividend to the State Government; or that the power network was in a state of collapse because no money had gone into renewing the energy infrastructure.

Beattie knew this. His standard spin is that no one told him anything about the run down state of the energy network. Hell, even I knew about the decade of underspending on infrastructure by Energex.

Now the finger should be pointed at the state ALP. As Christian Kerr over at Crikey says:

"Energex's dividends policy - what it pays to the Government - was determined by the Government-appointed Board, not the CEO. The Government Owned Corporations Act spells this out clearly. The Government decided to milk Energex and was aided and abetted by a sympathetic Board."

However, Premier Beattie on the television was all about due process, doing the right thing and sorting things out quick and smart. I could hear echoes of the reform lines in the background: they had replaced the old-fashioned governance structures that had caused inefficiency and waste and the rational evolution of electricity systems was on track. They were the good guys.

Suprisingly, in the interview Kerry O'Brien raised nothing about the political culture in Brisbane. Yet the reality is that Brisbane, just like Adelaide, has a political culture of intimidation, which operates to prevent criticism of the state ALP governments being aired in public. Christian Kerr describes this political culture as a culture of intimidation from the government. He says:

"Public servants, academics, scientists and members of advocacy groups in Queensland do not just feel constrained in what they can say to the media - particularly if they receive any money from the state government. They complain of an active culture of threats and bullying that prevents them from producing any material that could be seen as critical of Premier Peter Beattie or his government."

The similarity is that Adelaide and Brisbane are one newspaper towns where the journalists are kept on a drip feed by the government of the day.There is little criticism. It is called media management. Christian Kerr again:

"The problem is not restricted to Queensland. Press secs across the country increasingly act as heavies and manipulators rather than conduits for information. This behaviour, however, is worst in one-newspaper towns like Brisbane. Pressies aim to set media agendas each morning with soft stories placed in The Courier-Mail and hope that talk and the teevs will feed of them for the rest of the day. When they don't, the press secs turn feral."

The ABC is not doing its job as watch dog. They too have been intimated and bullied.

Another similarity. Premier Beattie said the blackouts were due to nature --big storms-- not bad government policy or governance. Ministerial responsibility did not apply. The spin was about evading ministerial responsibility. The finger for the failure of the electricity reforms and the creation of a national electricity market could not be pointed at the state governments.

Who then is responsible for people consumers suffering? I read in the Australian Financial Review this morning that retail energy companies are disconnecting households because they cannot afford pay their energy bills--just like South Australia. Presumably there are increasing numbers of households are surviving on candle power, eating cold food and having cold showers. Who is responsible for that market failure?

The energy crisis is flickering across the nation. Energy is no longer seen as an essential service. The free marketeers have a simple solution. Roll back the drift back to regulation and privatise the remaining government utilities. That would lead to electricity price reductions.

Well, that 'reform process' didn't work in SA did it.

| Posted by Gary Sauer-Thompson at 5:02 PM | | Comments (5)


The power crises, such as it's known, will get worse this summer in Qld before it gets better. Inside goss says Energex are legally free to shed loads at any time before June 2005 when compensatory legislation kicks in. A word to the wise in Qld would be to buy a Gennie real soon.
Beattie is likely to go down over the Maddock suicide given that speculation over the Beattie Governments stripping of QUANGO profits for budget balancing purposes is going to surface as fact sooner rather than later. Stay tuned.

Why is it some of us in SA have this feeling of deja vu?

In the post-privastisation energy world the declines in service and reliability are the sacrifices that are consciously made in the name of "efficiency."

In this world the private energy companies have no intention of creating spare generating capacity when they can use scarcity to manipulate prices.That is why they create scarcity by scheduling maintenance at peak times or in concert with other generators.

Nor do the large energy corporations want competiton,.They avoid competition at all costs. They are about mergers, acquisitions, control and increased market power.

The free markeeters Hayekian picture of an energy industry full of small, nimble innovative energy companies competing with each other to bring prices down is a myth.

The energy market reforms to create an efficient and competitive national electricity market have been a confidence trick.

The question is whether appropriate legislative structures/penalties could eventually be put in place to avoid the tendency to monopoly rent seeking behaviour you outline, as the tradeoff for efficiencies in gold plating such utilities or to reduce the trend to govt capital rundown of them. I guess the appropriate control structures may take some time to learn and fine tune, for long run consumer benefits. The umpire may still be out on that, although retail consumers have had to immediately face up to the intended loss of cross subsidy from big end users.

it seems to me that the moves to create a national regulator for the national electricity market are designed to address the flaws and deficiencies.

But that national regulator move not do is does address the structure and power relations of the market.

So the private comapnies and public corporations are now freed from environmental obligation whilst the government now pays for environmental protection (and equitable access).
Those who have gained most from the energy reform and competition were the energy intensive companies--aluminium, black coal, cement, paper and glass---as they have been able to obtain guaranteed fixed prices for their electricity.These are, in effect, subsidized by consumers.

The energy industries are the ones who have opposed any shift to electricity generated by renewables which make so much sense for SA in terms of peak demand in high summer(solar roofs) and exporting electricity generated by wind back east.

The energy industries have shifted the burden of paying for the non-commercial objectives assocaited with the environment to general taxpayers. Economic efficiency is the word used to remove these objectives from the provision of electricity.