TiP

For most of us who live in Australia’s largest State (and biggest electricity market), 26 March 2011 will be a red-letter day: marking an anticipated huge drubbing for what may qualify as the worst government to hold office in this country in the past quarter-century.

Unless the Liberal/National coalition stuffs up in the campaign, the outcome may well mean that the ALP will find it hard to get within striking range of government in the State again until Easter 2019.

The politics of power supply is destined to figure highly in the run-up to the 2011 poll because the Keneally government has managed to comprehensively mis-manage public perception of important aspects of its electricity privatisation arrangements. While sale of the energy retail arms of the three distribution businesses has garnered an impressive $3.8 billion, this success has been overshadowed by the fuss over the “gentrader” deals — a shadow that will extend to election day, helped by the decision of most Delta Electricity and Eraring Energy directors to quit rather than rubber stamp the sale engineered by State Treasurer Eric Roozendaal. Premier Keneally’s panic attack decision to close down parliament to prevent a Legislative Council inquiry in to the “gentrader” sales has served only to reinforce the view of her political opponents, the media and any voters paying attention that there is something fishy about the deal.

For many Greens, an equally potent reason to see off the Keneally government may be the belief that it is moving towards a decision to approve construction of a 2,000 MW coal-fired power station at Bayswater alongside the existing Macquarie Generation operations. The government retains ownership of the physical assets of Bayswater A and other MacGen operations, but intends to sell the site and leave the private sector to build a plant. Roozendaal has yet to announce any privatisation arrangements for the MacGen elements.

Environmentalists camped at Bayswater in December and clashed with police in protest at what they said was an impending announcement of the development.

For the bulk of NSW voters more concerned about end-user electricity prices and power supply security, the bigger issue, and one the Coalition will need to address urgently, is the development of new baseload capacity.

While the Greens and others have used GFC-depressed demand in 2009 to argue that new capacity isn’t needed, the conventional industry perspective is that there could be a supply shortfall by 2016-17, requiring development to be set in train as soon as possible.

Five years from now the existing fossil-fuelled generators in NSW will be operating at historically high levels of sustained production and a number of them are sufficiently old for this to represent a risk to supply. Even a serious breakdown of one plant would jeopardise State supply security.

The sticking point for environmentalists is that Bayswater B will add almost 13 million tonnes a year to NSW carbon emissions if coal-fired and more than six million tonnes if fuelled by natural gas. Current power sector emissions in NSW are about 85 million tonnes a year. One of the design requirements for Bayswater B is that it should be ready to be retrofitted for carbon capture and sequestration, but there is no telling at present whether or when CCS will be commercially available — and the NSW government has no idea where the emissions might be buried.

How well prepared the Coalition is to explain its electricity policy position in the run-up to the election could be an important factor in the size of its apparently-inevitable victory and, therefore, its longevity in office.

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