ACCC energy idiocy exposed

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From Bartho today:

It is a measure of the complexity of the issues, the scale and number of the deficiencies and the difficulty of responding to them that the Australian Competition and Consumer Commission’s inquiry into energy affordability has come up with 56 recommendations.

It is also a pointer to the convoluted nature of our energy policies that, while most of the recommendations appear to be reasonably sensible, even the more obviously beneficial recommendations for consumers will have their critics and the potential to produce unintended consequences and uncomfortable trade-offs.

All we need is one policy change to fix everything. But the disgraceful ACCC can’t bring it itself to endorse because it would mean admitting that it caused the energy crisis in the first place.

Goldman destroys the failed regulator, via The Australian:

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The competition regulator may struggle to cut wholesale power prices and cap the growth of energy majors, with elements of its reform package set to entrench the market dominance of Australia’s largest electricity players.

Goldman Sachs warned yesterday that elevated gas and thermal coal prices and peak demand growth would put “upward pressure” on wholesale power prices, potentially denting a plan by the Australian Competition & Consumer Commission to reduce prices by 22 per cent on average by 2021.

Instead, the watchdog may have to rely on reducing bills through its recommended changes to network charges and the removal of costly solar scheme subsidies.

“The ACCC assumes prices in 2021 will fall below the marginal cost of coal generation, which we believe is unlikely, and see the fundamentals driving upside,” Goldman analyst Baden Moore said.

Yep. The one policy reform that is needed and has already worked to lower power prices is gas reservation. It has halved gas prices and dropped power prices by one third. This was in defiance of the ACCC’s wishes and was only necessary in the first place because it allowed the consolidation of east coast gas reserves under the export cartel.

Reservation works in WA. It works in every other energy exporter. This is the energy intervention needed. Just force 10% of east coast exports into the domestic market. Use quotas if needs be.

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Instant cheap energy and carbon transformation back on track for the long term.

The ACCC is a banana regulator.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.