Australia’s bowel-shakingly awful energy scab grab

The scab grab in Aussie energy today is quite simply a bloody disgrace. The AFR leads off the farce:

The nation’s energy companies and biggest electricity users have given up on politics and begun backroom talks about a self-regulated package of measures to reduce greenhouse gas emissions, restore energy reliability and improve investor stability.

They include energy generators and retailers, manufacturers, mining giants and gas and oil multinationals.

…While the concept is still embryonic, sources said it would be an industry-wide program that would place obligations on participants and help ensure Australia met its Paris commitments.

In other words, believe when you see it. The BCA has been every bit as bad the politicians for years, flip-flopping all over the joint. If the gas cartel is in the initiative then it is almost certainly bullshit.

To wit, also form the AFR:

EnergyAustralia chief executive Cath Tanna is leading the energy industry’s rejection of government labelling of them as “bandits” and “fat cats”.

…But she is set to appeal to government to drop the “big stick” rhetoric and work with, not against, the industry to help improve the outcome for customers.

“Years of policy paralysis interspersed with intense bursts of market intervention have not led to good outcomes,” Ms Tanna says, pointing to hikes in power bills. “The stakes are simply too important to play politics.”

Jesus. Remember that it was always Australia’s decarbonisation plan to push the rise of renewables and allow gas generated power to replace coal as base load until storage costs caught down. It is the same plan underway worldwide. What happened instead is that an LNG export cartel stole the gas and made local generation uneconomic so the plan collapsed as grid instability spiked along with electricity prices. Cath Tanna has been at the heart of both, first building the QLD LNG plants then migrating to a giant electricity gouger.

The Coalition is totally lost, via Minister for Energy, Angus Taylor, also at the AFR:

Mr Taylor is being asked about the government’s push for AGL to keep the Liddell power station open.

He says one problem is “everyone is asked to pick winners” and he won’t.

“I’m not going to proscribe every detail about how that is going to be done. The role of government is take make sure if people aren’t working that out that we step out.”

Isn’t it strange that the Coalition is taking a big stick approach to business?

Mr Taylor, in his response, says the energy market has been the subject of a lot of interventions, there is no bipartisanship and there has been some bad behaviour.

“There is no room for bipartisanship” when the government has a 26 per cent emissions reduction target and Labor has a 45 per cent target.

“Work with me to deliver and the big stick can go back in the bag.”

“The mistake that has been made time and time again is when you layer in intermittency, the base load generators leave faster than you expect.”

A big stick is exactly what is required. It is all that is required. The big stick of domestic gas reservation which will deliver a reliable and low cost feed of gas for domestic base load power generation. Once it does ALL PROBLEMS ARE RESOLVED. The gas price craters. The electricity price craters. Renewables roll out as grid stability is restored.

If we don’t do it then this giant scab grab is going to wreck the economy and the big stick will turn into a rolling tank driven by John Quiggin:

Certainly, privatisation was a mistake and markets haven’t yielded the promised benefits but electricity systems with predominantly private ownership and designed markets have performed relatively well in some places. For example, the Electricity Reliability Council of Texas (Ercot) has done a good job in managing the transition from coal-fired power to renewables while holding prices down.

Why has Australia done so badly? The reform process in Australia has treated markets and competition as goals in themselves, rather than as policy instruments designed to produce useful price signals and thereby guide investment and consumption decisions.

The failure to consider the appropriate role of prices can be seen at every stage in the process, from generation to retail.

That’s bullshit as well. There are areas where privatisation has failed such as retail waste. But there are also areas where public ownership has failed such as the massively costly gold-plating of obsolete infrastructure. Each privatisation must be assessed on its merits.

You only have to fix one thing for cheap, reliable and sustainable energy: gas. But that simple truth is now lost under a tide of bowel-shaking, self-serving propaganda.

Comments

  1. the punters are voting with their roof tops
    read somewhere that a roof top solar panel is being installed each 10 secs
    and this is due to increase markedly, so a finger to the govt and renew energy hopefuls. (ZEN)
    (now if only the panels were strayan made)

    • >(now if only the panels were strayan made)
      That’s just crazy talk! We don’t manufacture nothing – we do services mate! Services economy! We’re too expensive to manufacture anything, dont’cha know that?!… Sheesh! Get ya’self a skim soy milk decaf cappucino from that coconut-oiled bearded barista over there, sit down and read the Domain highly professional editorials and opinion pieces…

      • Just had a coffee and found this,

        Anatomy of a market crash: A brief history of irrational behaviour
        Debt is the root cause of a financial crash.
        What have we learned from that dark day? Ultimately, it seems, very little.
        But as events transpired, it was merely a practice run for what was to come.
        Witness, the Asian financial crisis of 1997, the long-term credit bank crisis, the tech wreck of 2001 and the recent big one of 2008.
        Now, with Wall Street soaring ever further into the stratosphere on a daily basis, at a time with investors blithely ignoring the monumental shift from the US Federal Reserve to tighten monetary policy, a few seasoned observers are concerned the foundations for further upheaval are being laid.

        The perils of prediction
        Wind back 30 years . The tremors began around a month earlier. Relatively gentle at first, they were brushed aside by an investment community convinced the party would never end.
        The market, in fact, peaked about month earlier on Monday, September 21.

        It was the very day swashbuckling entrepreneur John Spalvins — whose Adelaide Steamship group owned Penfolds, dairy group Petersville, department store David Jones and the biggest stake in the National Australia Bank — declared he’d been wrong about a market crash.
        His timing was exquisite for all the wrong reasons.
        A month later, his debt-laden empire — along with those of Rupert
        Debt was the root cause.
        It sank the entrepreneurs and white-anted the foundations of the financial system through irresponsible risk taking by the banks.

        Two decades later, and there was the same toxic combination — on steroids.
        Lax lending standards, an explosion of debt and a range of complex new financially engineered products.
        They had indecipherable names like Mortgage Backed Securities, Collateralised Debt Obligations and Credit Default Swaps to synthetic derivations of them.
        No-one could figure out how much debt was out there, or who held it; a problem ironically exacerbated by risk minimisation strategies that had every major financial institution taking slices of everyone else’s debt.
        The fix? That’s easy.
        Just add more debt. But this time shuffle it to a new destination.
        China’s questionable numbers
        Why does China even bother producing GDP numbers that few economists see as credible, asks Stephen Letts.
        In 1987, the problem was corporate debt. In 2007, it was debt instruments spread through investment banks and financial institutions.

    • My dad has solar panels and is now talking about spending $5000 on batteries. Says it will drop his power bill to almost nothing. Idk. I haven’t looked into it. But I was at a job network center last week. They have a couple of PCs and a phone for their job hunters to use. An Aboriginal guy came in and used their phone to call his power company. He just got a power bill for over a thousand dollars and needed to increase his payback plan to $50 per payment. So while those who can afford the ‘investment’ pay almost nothing, those with the least pay the price. This is Green economics in action.

      • “This is Green economics in action.”

        No its decade(s) long policy vacuum. Its media howling against change. Why Climate change is such a big no no is a mystery to me but if the idiots in charge weren’t beholden to their lobbyists we would be tracking fine. The greens and people who understand sustainability not consumerism is the way forward are not the problem.

      • you are both wrong. It’s a dastardly plan that combined with requirements for all solar and battery installs to be permanent and not available to renters, will be used to save the housing bubble.

      • Jumping jack flash

        3ris: Pff! The Greens would be as powerless as any other party is in the current political environment.
        If a Greens PM was in the hotseat they would have EXACTLY the same amount of power as a LibLab PM, ie, SFA.

        The government’s ineptitude isn’t because they’re particularly stupid, even though they’re nothing special, intellectually speaking, it is because governments before them ruined the whole place and then ran off.

        Its like going to play a soccer game on a field, and the team before you bulldozed and dug the whole thing up. Your soccer game isn’t going to be very good. It doesn’t matter who plays, Greens, LibLab, ONP, Bob Katter’s Crazy Shotgun Party, its going to be awful.

        The political landscape needs radical change. Stop the whole PPP and privatisation crap. That only works in the good times. In the bad times it just causes oligopolies and gouging that can’t be controlled while subscribing to free-market capitalism.

      • Actually, no. The situation is simple: once it is cheaper to source power from solar than it is from the grid, consumers will switch — there is no requirement for Govt to ring a bell. Citizens are not as thick as the Govt likes to paint them out to be — they care deeply about reducing their costs. It’s what rational people do.

        The only reason for Govt to ever get involved is to throw taxpayer money at uneconomic endeavours to make them more attractive. It is not more complicated than that.

      • “once it is cheaper to source power from solar than it is from the grid, consumers will switch”
        This only works if you can completely disconnect from the grid, with no backup for weeks of no sunshine at time.
        They will simply transfer the costs from usage to connection as people install more solar.
        You can also only do it if you own your home so renters will be further screwed.

  2. The gas shemozzle is not an unplanned situation. It’s exactly what certain people want to see. Follow the money

  3. there are also areas where public ownership has failed such as the massively costly gold-plating

    At least the money is going into government coffers in that case!

    Gold plating government owned infrastructure is way better than gold plating privatised infrastructure. Recently, the government owned grid in QLD took the regulator to court to try and increase fees and the QLD government said “withdraw the case. Do not sue your own voters”.

  4. Jumping jack flash

    ““Years of policy paralysis interspersed with intense bursts of market intervention have not led to good outcomes,” Ms Tanna says, pointing to hikes in power bills. “The stakes are simply too important to play politics.””

    Oh yes of course. Explain, Ms Tanna, how the government could create policy to curtail the greed and gouging rife within your sector? The government had no control over anything, nor did they want it. That’s why you even have a job and earn the money you do.

    Hypocrites. They were handed the keys to the kingdom on a silver platter and now they complain there wasn’t enough regulation?

    Just spend your gouged money paying back your debt. Hopefully you pay it back quickly, and your greed is satiated, so trickle-down can start again.