Thought-Factory.net Philosophical Conversations Public Opinion philosophy.com Junk for code
parliament house.gif
RECENT ENTRIES
SEARCH
ARCHIVES
Commentary
Media
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
Cartoons
South Australian Links
Other
www.thought-factory.net
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Energy reform « Previous | |Next »
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.

| Posted by Gary Sauer-Thompson at 6:35 AM | | Comments (7)
Comments

Comments

" These green imposts have no discernible environmental benefit. It's the standard right wing position."

Not quite. The neoliberals also want the state owned networks in NSW and Queensland to be privatised. They argue that removing union feather-bedding and poor management practices arising from government ownership would cut network costs.

CoAG could shave the profit margins that poles and wires companies are creaming off the top of their network charges by regulating for a smaller rate of return and lower incentives for capital expenditure.

"The reason for the slow reform progress is that the states, such as Queensland and NSW are recalcitrant as they own the fossil fuel power stations"

States like Queensland and NSW aren't going to agree on anything that might cost their state economies or reduce their state revenues.

"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."

They will entrench the power of Big Energy's network business. They still retain control over--- remain judge and jury over--- deciding whether to do network upgrades or load reduction/embedded generation.

The reform need is to move away from just upgrading network capacity. So they can continue to overestimate network capacity requirements, overestimate the costs of providing reliability, and charge consumers big time for the overestimates.

We have a situation where state government network businesses can rest safely in the knowledge that their owners largely control the regulatory levers. This ensures the inflated returns captured by their network businesses and the owner, ie., state governments, to capture a big margin.

"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."

So consumers are hit by having to fork out for additional network infrastructure that we don’t really need.

renewable energy is a disruptive technology and when it is introduced into an established national electricity market (as new entrants) it is highly likely that existing business models will be forced to change and adapt.

The current situation is one of reducing costs for consumers while maintaining payments for network operators, and in some cases the state governments which own them.

" These green imposts have no discernible environmental benefit. It's the standard right wing position."

Abbott public statements, say this eg., this:

I think if you are a fair minded observer you would say there has been a very consistent level of opposition to the carbon tax because the public understand that this is a tax which will hurt them without helping the environment. It won’t clean up the environment but it will clean out people’s wallets and that’s what it’s doing. Every time your power bill goes up, that’s the carbon tax doing its job. Every time your power bill goes up, government ministers are saying, well, that’s why we put a price on carbon, to make your power more expensive.”

They hope that the major electricity price rises Joe Average has noticed since 2008 and ongoing until the next election will all be attributed to the carbon price.