ACCC gets a chance to redeeem itself on energy

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Chris Bowen is buying time:

“This is the system working. We have some way to go on; there’s no complacency. We’re very alive to the risks that remain in the system,” he said.

“That we have we stood at a situation where load shedding was indeed looking likely, that blackouts were possible and we’ve managed to avoid all the above and there has been no impact on the reliability for consumers – it’s a very good thing.”

…“The Energy Security Board is today underlining the size of the task we have to undertake as a nation. That’s a task the Albanese government is up to and up for, working with our state and territory colleagues,” Bowen said.

The ESB is working on long-term stuff that is irrelevant to today’s crisis. It’s like arranging to buy a new car when you’re going head-on under a semi-trailer.

The causes of the crisis are NOT:

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  • coal turbine breakdowns;
  • capacity problems;
  • decarbonisation, nor
  • the weather.

It is the price of gas and coal for Australian power producers that are being inflated by war-profiteers exploiting the Ukraine conflict. This is all that matters to both short-term energy prices and the long-term.

If the price of gas and coal is brought down then there will no problems with any of the above. We will have abundant fuel, abundant renewables investment and competitive prices.

The right answer is in the offing, if the ACCC redeems itself:

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The competition regulator will probe energy companies’ profits and margins as part of an investigation into soaring electricity and gas bills with power prices trading five times higher than a year ago.

After receiving a letter from Federal Treasurer Jim Chalmers to investigate prices, the Australian Competition and Consumer Commission said on Monday that it would launch the probe and also assess any need for regulatory change to ensure electricity and gas markets are functioning properly.

“Under direction from the Federal Government, we will use our full information gathering powers to provide greater transparency around the factors influencing electricity and gas prices, including profits and margins from a wide range of energy companies,” ACCC chair Gina Cass-Gottlieb said.

“In line with the Treasurer’s request, we will also assess and bring to the government’s attention any need for regulatory change to ensure electricity and gas markets function properly for the benefit of all Australian consumers.”

The ACCC also plans to report back to the nation’s energy ministers by July on the current state of the market which saw wholesale spot power prices rise five-fold in the first two weeks of June from the first quarter of 2021.

“There is no doubt that international factors such as the war in Ukraine have heavily impacted the global gas supply and prices. A cold start to winter and a reliance on ageing coal-fired power stations amplified challenges already facing the Australian energy market,” Ms Cass-Gottlieb said.

“We are acutely aware of the pressures that rapidly rising energy prices are placing on Australian households and businesses. We are working closely with our colleagues at the Australian Energy Regulator to monitor the market and to take action against conduct harming competition or consumers and to preserve the competitiveness of our energy markets.”

The holy trinity of energy: low emissions, reliability and cheap prices is only a matter of disconnecting local fuel prices from global using domestic reservation and/or export levies on coal and gas.

The ACCC has been horribly guilty of making the energy crisis worse over a decade:

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  • it waved through the various purchases of gas reserves by the cartel;
  • it constantly belittled reservation as solution only flip-flopping after I personally attacked Rod Sims;
  • it failed to be tough enough when commissioned to track the great gas gouge.

Here is your chance, ACCC. Do not return to the economic laboratory test tube of studied efficiencies that are meaningless in a failed market run by the energy cartels.

Give the Albanese Government cover to break the gas and coal export cartels with domestic reservation and or export levies.

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The nation needs you.

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.