December 4, 2012
Expectations ought to be low for electricity reform in Australia despite the marked increase in electricity prices for consumers, due to the gold plating of the grid to strengthen the network to cope with rising peak demand and consumer angst. This is so even though the reality is that Australian electricity consumption is falling. The grid requires less electricity than the energy companies (eg., Origin and AGL), which are heavily invested in coal and gas, say.
The reason for the slow reform progress is that electricity regulation is largely a state responsibility, and the state governments have far more control over the important legislative and regulatory levers. States, such as Queensland and NSW are recalcitrant as they own the fossil fuel power stations. Their rhetoric is that carbon pricing and renewable energy schemes (eg.,the Renewable Energy Target) are the cause of price increases. These green imposts, they say, have no discernible environmental benefit. This is the standard right wing position.
The Gillard Government's proposals, which include the national rollout of smart meters, more flexible pricing and extra resources for the regulator, are not going to do much in terms of reform. Firstly, the core reform is to shift the power generation to non-fossil fuels to reduce greenhouse gas emissions. Secondly, the National Electricity Market, is rigged in favour of generators and retailers, and against consumers.
Thirdly, better interconnection in the national electricity grid is required so that Victorian wholesale electricity prices would drop rapidly whenever the wind blows in South Australia, because of the latter state’s extensive wind power assets. The fossil fuel lobby in Victoria is opposed to this because it means less money for them.
Fourthly, the objectives or the design goals of of the national electricity market (NEM) are about the interests of the energy companies selling us more power; not energy efficiency, or reducing greenhouse gas emissions. The the interests of consumers and the environmental sustainability take a back seat.
The NEWM was designed by neoliberals, who purport to liberate the market from political interference. The state, neo-liberals assert, should do little but defend the realm, protect private property and remove barriers to business. Neoliberalism protects the interests of the corporate energy elite against all-comers. Today, neoliberalism is the ideology used to protect the fossil fuel industry from both the disruptive technology of renewable energy and the new renewable energy entrants into the national electricity market.