Malcolm Turnbull says the government needs to “get to the bottom” of excessive profit margins made by electricity retailers, insisting the Australian Competition & Consumer Commission’s investigation will help address the “very real problem” of rising electricity prices.
An interim report will be handed down in six months and the full report published by June 30 next year.
“Electricity is absolutely an essential service,” the Prime Minister said.
“All Australian families and jobs depends on it. We are tasking the consumer watchdog, (the) ACCC to investigate it. They have full investigative powers to request information. They and they alone can get to the bottom of this and will do so promptly.
It is a worthwhile question asking about retailer market structure for the longer term and it may help prevent some price hikes having them under scrutiny but that is not what is causing recent power price spikes.
It is simply the price of gas that is the problem. Here’s the chart (the green arrow is the carbon price abolition, red is Curtis Island LNG startups):
It is gas that sets the marginal cost in the National Electricity Market owing to where it sits in the wholesale electricity market bid stack. See Australian Energy Market Operator description below:
High cost gas sets the marginal price and when the price of gas is high so is the price electricity. This is made worse by the fact that the economics of peaking gas plants (turbines) are far more sensitive to input price changes than are coal-fired power.
We need cheaper gas. Then all of the problems in the energy market will go away at once and we’ll have time to decarbonise the network with longer term battery and other storage options to stabilise renewables. This was always the national plan, such as it was, that gas would be the transitional fuel as we move steadily from coal power to renewables. The only thing that has gone wrong with it is an east coast gas cartel has formed around Curtis Island and is gouging the life out of everyone.
