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It makes no sense

In March 2014, the Australian Competition and Consumer Commission (ACCC) opposed AGL Energy Limited’s (AGL) proposed acquisition of Macquarie Generation, NSW government-owned power stations which produce just over a quarter of NSW’s energy.

The ACCC considered the proposed acquisition was likely to result in a substantial lessening of competition in the market for the retail supply of electricity in NSW. The ACCC was also concerned about the likely competitive impact of the proposed acquisition in one or more of the wholesale electricity markets in NSW, Victoria and South Australia, stating that

“the proposed acquisition is likely to mean that consumers will ultimately pay more for electricity, receive lower quality service and be offered less choice.”

A major cause of concern was that, if the acquisition went ahead, up to 80 per cent of the state’s energy generation would be controlled by AGL, Origin and EnergyAustralia.

The Australian Competition Tribunal overturned the ACCC’s decision deciding that the benefits to the public of freeing up money for “critical infrastructure” outweighed any detriment to competition.

“The ACCC acknowledges and respects this decision by the Tribunal. However, the ACCC is disappointed that the Tribunal has authorised the proposed acquisition given that, if it proceeds, the ACCC considers it would have significant implications for the future of competition in, and performance of, the retail and wholesale electricity markets,” ACCC Chairman Rod Sims said.

“This is because if the acquisition of Macquarie Generation by AGL proceeds, the three largest generators in NSW will have been sold to the three largest retailers resulting in a permanent structural change in the NSW electricity market. These vertically integrated retailers will dominate electricity supply.”

“The ACCC remains of the view that privatisation of these assets to an alternative bidder would achieve a more competitive outcome which in turn will benefit NSW consumers. The ACCC also remains concerned about whether the conditions of authorisation are able to be effectively enforced.”

Since this decision, coupled with the repeal of the carbon price, total emissions in the year to January 2015 were 2.6% higher than in the year to June 2014, and the emissions intensity of NEM electricity was 3.3% higher.

The biggest source of carbon emissions is electricity and about 75 per cent of this comes from coal-fired generators. The share of the national electricity grid being powered by brown coal – the cheapest and most carbon-intensive type – is rising. Three-quarters of the country’s coal power plants are running beyond their original design life: they are the reason our electricity sector is one of the most carbon intensive in the world.

Within a decade, around 50% of Australia’s coal-powered generators will be over 40 years old, with some currently operating stations set to hit 60.

The energy white paper says

“The energy market has proven to be a robust mechanism for driving efficient outcomes and is the appropriate mechanism to signal the timing of decommissioning of generation.”

With the repeal of the carbon price, the uncertainty about the Renewable Energy Target, the rise in gas prices, and the lack of safeguard mechanisms in the Emissions Reduction Fund, there is no incentive to move away from old coal-fired generation.

As Mike Baird fires up to privatise the poles and wires in NSW, more questions are being asked about the success of privatisation in Victoria. Whilst consumer prices are lower, according to economist and former NSW Treasury official Dr Betty Con Walker, the privately-owned Victorian network has failed in one area where NSW has succeeded: investment.

“The buyers of the Victorian agencies have not kept up with spending that’s required,” she says. When asked why that is, she replies: “Because they’re corporations. They’re motivated by profit.”

The implication of this is that the short-termism of listed companies, which must appease dividend-hungry shareholders, leads to corner-cutting, which in turn leads to shoddy maintenance and failure to invest properly.

It should also be taken into consideration that the NSW government will be giving up a massive source of income – $1.7 billion last year.

Every decision being made by our conservative governments flies in the face of reality.

The environment, climate, and health implications do not feature in their calculations. Every action is designed to prop up the fossil fuel industry – rescinding carbon and mining taxes, fossil fuel subsidies, exploration grants – whilst destroying our clean energy future – uncertainty about the RET, ignoring/abandoning the one million solar roofs promise, funding investigations into the “health impact” of wind turbines.

The advice of the ACCC is ignored, monopolies are encouraged, ongoing revenue is thrown away – all so we can grab some cash to build more roads.

Instead of polluters paying for the damage they cause, and hence being motivated to invest in reducing emissions, we will either pay for them to upgrade their factories to reduce their power bills or we will allow them to carry on with business as usual. Should they increase their emissions there are so many out clauses in the ERF that they are unlikely to face any penalty.

It makes no sense.

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11 comments

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  1. Terry2

    It all makes sense, Kaye, when you’ve been to the Abbott school of deductive logic.

    He said today – but was unable to hang around to answer questions – that he had already cut the Labor debt and deficit disaster by half – this at a time when the net goverbnment debt and deficit have both balooned since the coalition came to office. He referred us to the Intergenerational Report to emphasize his point : I think that means the forty year trajectory nonsense.

  2. Keitha Granville

    *agree with above* It all makes sense to this government because they are maintaining their relationships with big business. Coal is the future according to the PM.
    The only way for this madness to end is for this government to end. We have to focus on getting that to happen next year. Otherwise we are doomed.

  3. Zathras

    Terry2,
    You’re right to question the Intergenerational Report.

    While the data in the report was independently compiled, the presentation of the data is the responsibility of the Government.

    Maybe that’s why they paid $380,000 (of our money) to consultants Hall and Partners to run 30 Focus Groups on how it should be presented to the public – as a political spin document to spook the Senate into supporting their policies.

    As for the Direct Action strategy, it’s like Greg Hunt working as a traffic cop taking money off innocent drivers and giving it to speeders in the hope they will drive more slowly.

    It makes as much sense.

  4. Sad sack

    Spot on Keitha.
    The Abbutt’s opposition has joined him too often and he/they seem to be unable to compete, at any level. With the PM exceeding all estimates of his avoidance tactics, little billy marginally more visible and the rest of labor pairing the coalition absentia, the chances of re-election are looking good enough for him to capitalise on the ANZAC euphoria and the budget oposition to go to the polls in June.

  5. Kaye Lee

    “The renewable energy sector has lost almost 2,500 jobs in the last two years, according to official figures from the Australian Bureau of Statistics.

    Job numbers in the sector peaked between 2011 and 2012 at 14,890, but fell by 15 per cent to 12,590 (a loss of 2,300 jobs) between 2013 and 2014.”

    http://www.abc.net.au/news/2015-04-13/renewable-energy-job-losses/6389242

  6. stephentardrew

    McKibben absolutely nailed it beyond any doubt.

    His reference to conservative radicalism is a them that should by pushed relentlessly.

    If ninety seven percent of doctors believed that mosquitoes cause malaria, yet 4% disagreeing, was presented as the status quo they would be laughed out of existence and probably end up in court on manslaughter charges.

    These people are fools and damn ignorant uneducated corporate toadies leaching off of the suffering of the planet just for profit and personal wealth.

    These folk are, to say the least, absolutely crazy in the real sense of the word.

    And the are governing this country.

    They should, in the future, be held accountable for criminal negligence.

  7. Garth

    Thanks Kaye.

    They just don’t seem to have any shame about how blatant their lies and obfuscation are. Terry2 is spot on highlighting this most recent mud being thrown in the eye of the Australian electorate … how the hell can they claim with any sense of conscience that a projection out to 40 years time (assuming that the ‘Labor’ trajectory has absolutely no intervening government action) is a halving of the debt ? This is so completely grubby!! Add on the fact that the ‘Labor’ trajectory in the IGR is based on Hockey’s fudged 2013 MYEFO (instead of the pre-election PEFO prepared by treasury) and I simply can’t bring myself to think clearly. I really am in danger of having an aneurysm … these assholes are doing my head-in. Don’t get me started on Shorten’s fart-assing around …. how the hell that man is supposed to represent the progressive left is beyond me.

  8. crypt0

    “a person afflicted with a personality disorder characterized by a tendency to commit antisocial and sometimes violent acts and a failure to feel guilt for such acts ”
    This definition rather neatly describes the abbott government individually and collectively.
    No prizes for knowing what this definition primarily refers to …
    Who would have thought ?

  9. BJWard

    While they’re profiteering on the backs of energy consumers throughout the country, the energy companies are working all sorts of shonkies on them. Greg Ray in the Newcastle Herald has run a series of articles on the topic (unfortunately I can’t provide links because my computer is playing up and I’m typing this on the tablet). For instance the companies might say they can’t read your meter (now you have solar panels), despite the fact they’ve been reading it every quarter for the last 30 years; so they present you with an “estimated” account which is little, if any, lower than ypur last pre-solar panel bill. It’s interesting to examine the demographic here. Ray hasn’t said as much, but I get the impression this particular racket is directed aganst older people – maybe they hope their targets won’t catch on.

    I note with interest that yet another “expert” has come out with the statement that consumer electricity prices are “lower” in Victoria. Um, lower than what? Lower than they otherwise might have been? Perhaps, but not according to my Victorian-domiciled relatives; who do, however, agree that there’s been no post-privatization investment. Lower than NSW? Emphatically not so – an easily proved assertion. All it takes is a visit to the retailers’ websites. You’ll quickly discover that Victorian quoted prices are $30 a month or so more than in NSW, depending pon your quoted usage.

    Of course, all this ignores the strategic questions of who will finish up in control of vital national assets, and what will replace their revenue-generating, as distinct from electricity generating, capabilities. I won’t examine those aspects further, except to ask whether the loss of control over those assets, and the revenue losses, will be sufficiently compensated by the one-off “sugar hit” of their sale.

  10. cartoonmick

    Paying polluters ?? The direct action plan is something many people just don’t understand. They just don’t get it !!

    The elementary concept of the plan is explained in this cartoon which looks at a very similar scheme . . . .

    Editorial / Political

    Cheers
    Mick

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