Has a political party ever torn itself apart so spectacularly as the Coalition on energy? The AFR says the NEG will pass the party room:
The Coalition party room is expected to endorse the National Energy Guarantee on Tuesday despite last ditch efforts by former prime minister Tony Abbott and former Nationals leader Barnaby Joyce to torpedo the policy.
As the nation’s biggest businesses and energy users issued an eleventh-hour plea for the policy to go ahead, multiple Coalition sources said that while there would be a blow up from Mr Abbott and others, the majority of conservatives were prepared to back the policy, if only because there was no alternative.
But The Australian is leading the cow entirely elsewhere:
Barnaby Joyce will ask the government to regulate energy prices as he weighs up supporting the national energy guarantee.
The former deputy prime minister said major power players such as AGL had taken advantage of their market power and needed to be reigned in, which could include setting a maximum price that energy retailers can charge their customers.
“You have a mechanism to deal with emissions you have a mechanism to deal with dispatchability,” Mr Joyce said this morning.
Madness, of course, when the exact same policy should be applied to the real culprit behind power price rises, the gas export cartel.
Former gas executive, the conflicted Judith Sloan, piles in:
For a desperate Turnbull, this is where ACCC recommendation four — contained in the Australian Competition & Consumer Commission’s report into retail electricity pricing — comes in.
…This recommendation involves the Australian government operating a program to enter into low fixed-price energy off-take agreements for the later years (six to 15 years, for instance) of new dispatchable generation projects that meet certain criteria, including.
…By seeking to oversell what is essentially a complex dog’s breakfast, Turnbull and his dogged lieutenant, Frydenberg, may have bitten off more than they can chew with the NEG. It may be better to ditch it and just run with supporting new dispatchable power plants. In this way, prices may actually come down, rather than be modelled to come down.
Forgotten is that coal is not dispatchable. It is base load and can’t be turned on and off. It won’t lower prices anyway given by the time it is built renewable plus storage will be cheaper which is why nobody in the private sector will build it.
Nonetheless, the rentiers are queuing up, also at The Australian:
One of Australia’s leading energy companies has flagged plans to enter a partnership with specialised Japanese or Chinese developers to build a “clean-coal” power plant within five years if Malcolm Turnbull’s energy reform blueprint is implemented.
Ahead of a crucial Coalition partyroom meeting today, industry support for coal-fired power stations is expected to help win over wavering government MPs who must endorse the national energy guarantee to secure support from the states.
Australia’s largest energy users — including BHP, Rio Tinto, BlueScope, Shell, JBS, Tomago and Alcoa — last night wrote to federal MPs urging them to support the NEG, claiming the risk of further inaction was even higher energy prices.
Hilarious chutzpah from BHP given it is member of the gas cartel that is forcing up power prices! Remember that gas sets the marginal cost of electricity.
Meanwhile, the real problem is languishing and forgotten:
The high cost of gas may force heavy industry to shut down and prolong suffering among consumers unless Australia frees up fresh gas supplies and adopts the national energy guarantee, Dow Chemical has warned.
Gas prices on Australia’s east coast have tripled in the past four years, according to the chemical giant, suggesting current prices of up to $12 a gigajoule compared with $4 a gigajoule in 2014.
“While many are saying the crisis facing the gas market has eased, it is still three times the expense than it was just four years ago, and without a concerted effort and plan, consumers will continue to suffer and businesses will continue to shut down,” Dow’s Australia president Louis Vega told The Australian yesterday.
Yep. And it will get much worse when the gas import terminals arrive. Though the propaganda is thick on the ground, at the AFR:
Emerging plans for LNG import terminals in the southern states are putting a ceiling on domestic gas prices just above $11 a gigajoule, leaving plenty of opportunity to develop profitable new gas supply, according to the executive leading the only new conventional gas project in the south-east.
David Maxwell, chief executive of Cooper Energy, which is building the $355 million Sole gas project off the Victorian coast, confirmed figures from the competition watchdog this month that gas prices in the southern states are firming up in the $9-$11 a gigajoule range for long-term contracts.
That compares with historical prices of $3-$4 a gigajoule and well above the sub-$7 range that some chemical makers say the industry needs to be competitive.
Import terminals can only buy the gas at $14 so how are they going to deliver for $11?
The simple and clear solution remains. Toughen up domestic gas reservation. Fix the price if necessary at $5Gj. Industry is saved and power prices collapse. Just like in WA.
The Australian national interest is lost in this giant scab grab.
