Josh Frydenberg is either lost or corrupt on energy. All we need is a little domestic gas reservation. The insufficient amount that we have had has already lowered the wholesale electricity price by one third, via The Australian:
Electricity retailers are on notice to pass on sharp falls in the wholesale price of electricity after AGL Energy rejected the federal government’s preferred plan to inject more competition into the market by selling its Liddell power station to rival Alinta.
Energy Minister Josh Frydenberg said he was disappointed in AGL’s decision but said the government would not act on demands from some party members, including former prime minister Tony Abbott, that it compulsorily acquire Liddell from AGL and onsell it to Alinta.
Mr Frydenberg said wholesale power prices in the national electricity market had fallen nearly 30 per cent in the past year and highlighted the Australian Competition & Consumer Commission’s final report on retail electricity prices next month as a signal for retailers.
The problem with passing on price falls is that the long term contract system which constitutes the majority of market volumes prevents sharp moves. That’s why consumers have so far been spared the full glare of price rises. Prices only rise as long term contracts roll off. Given the electricity price is still double where it should be that means that there may be more retail price hikes still ahead despite the falls in wholesale prices. It’s hard to tell.
As for Liddell, why would AGL keep it open when it will make more money converted to renewables (that is, they will be cheaper).
Meanwhile, Frydenberg’s National Energy Guarantee, which will only raise energy costs by slowing the renewables roll out, is begging the private sector for staff because the thing is so complex, unworkable and political. At the AFR:
The Energy Security Board has asked business, industry groups and energy companies to provide staff to their organisation to help deliver the Turnbull government’s National Energy Guarantee by August.
In a sign of the tight time frame and federal Energy Minister Josh Frydenberg’s desire to land the crucial energy and climate policy, the ESB has taken the extraordinary measure of asking key interest groups to second staff to work full time with their organisation to help write the detail of the policy to be voted on by state and territory governments later this year.
Some of the organisations asked to send staff to the ESB include the Business Council of Australia, the Australian Industry Group, Australian Energy Council, the Clean Energy Council as well as big energy companies, including Origin Energy – all of whom have a stake in the outcome of the NEG.
Regulatory capture anyone?
Finally, we are still mulling whether to commit energy suicide by selling the core assets in the east coast gas cartel to a foreign bidder, materially Chinese to boot:
Having bid against itself for a fourth time in nearly six months, Harbour Energy has called on Santos and its chairman to make a decision that will be fateful one way or the other.
In the hours after delivering a revised $14.4 billion bid for Santos, Harbour Energy confirmed that the offer was “best and final” and did so without the usual caveats that might allow it to return fire if a better offer comes along.
In other words, the negotiating is over and Santos chairman Keith Spence now has a deal that must be done or undone.
All we needed to fix everything – gas and power prices and decarbonisation – was a little gas reservation. 10% of east coast export volumes held back via fixed price quotas if the cartel wouldn’t play ball.
Instead we have Frydenberg eating his own vomit all over the east coast grid.
