Archive for September, 2012

Gift that keeps on giving

For the media, the power prices issue is the cut-and-come-again cake.

Its largesse is unending.

For a considerable time, the story line has been straightforward: nasty suppliers gouging you and me.

This year, the tale has taken several twists, starting with the News Limited tabloids and a television station hitching up with a power market service company and reportedly attracting 200,000 households to join a scheme offering lower bills (attained through bulk buying).

This seems to have been the spur for Julia Gillard to launch her “I have a Big Stick” gamut in August – which she followed up by instigating a Senate select committee inquiry in to power prices, currently under way.

This is how Fairfax political writer Lenore Taylor sees Gillard’s approach:

“The Prime Minister (has) started a rhetorical war with the Liberal States over the regulation of power pricing, highlighting the large non-carbon tax component of recent price rises, blaming the States for price gouging and insisting they agree to regulatory changes which they were showing every sign of agreeing to anyway.

“She (has) failed to coax the Opposition Leader into a discussion of anything beyond the carbon tax, but she (has) succeeded in getting some public traction for the idea that much of the recent (power) price hike has other causes.”

As I have demonstrated in a number of commentaries on this site and in “Business Spectator,” Julia Gillard is on slippery ground here – and just how slippery has been illustrated in the past week by Resources & Energy Minister Martin Ferguson taking a big stick to independent MP Rob Oakeshott, who has come up with a private member’s bill for a federal take-over of power price regulation.

Lenore Taylor again has been the Fairfax journalist to break the story that Ferguson has snapped back that the States are not responsible for the big rises in power bills over the past 4-5 years and to reject their being “threatened in a quest for cheap headlines.”

Ferguson is quoted as saying: “The States do not control the regulatory authorities that set prices and any suggestion that they do has no basis in fact. (Reform) needs co-operation because it is complex (and it) won’t be resolved by cheap headlines.”

Ferguson points out that energy ministers have been engaged in conducting reviews and having rule changes drafted.

He notes that he has had “full co-operation” from State ministers in this quest and that the aim “for some time” has been to have the changes resolved before the year’s end.

Irresistibly, Ferguson’s reaction is being contrasted with his Prime Minister’s pursuit of “cheap headlines” on the issue and the impression she went out of her way to create that she needed to drive the States to do the right thing – despite having Council of Australian Governments’ agreement a fortnight before she spoke at an Energy Policy Institute of Australia lunch.

The work of the Senate select committee will continue to keep all this in the limelight.

It has held public hearings in Sydney and Melbourne in the past week and moves on this coming week to meet in Perth and Brisbane.

So far it has received 76 submissions.

Let it be said that most of these contain a wealth of information and opinion from stakeholders that are well worth getting on the public record.

(All can easily be found on the Senate website once you have located the select committee’s sub-section.The Hansard record of the Sydney hearing is now also on the site.)

En passant, I note that Unions NSW did not get to give evidence when the committee held its Sydney hearing.

If you read my commentary in “Business Spectator” last Monday (“Labor electricity perks unplugged,” 24 September) – in which I revealed what the unions said about dividends paid to the State government under the long-running Labor regime – you will appreciate why I was rather looking forward to this body participating in the hearing.

However, another union, the Communications, Electrical & Pumbing Union (CEPU), has now also come to the party.

In its submission, which contains some good information points as well as the expected special pleading about the perils of electricity privatisation, the union also picks up the dividends issue.

It says: “Traditionally the dividends earned from government-owned enterprises have been used as a source of revenue to support other government services.

“While there is nothing wrong with this in principle, we believe, with respect to those energy companies still in public hands, that a balance should be struck between the needs of other government services and the pressure on electricity prices.”

How awkward for the Prime Minister that the union movement, which is prominent in her personal power base, keeps on speaking up for the dividend payment approach for which she flayed the O’Farrell government on 7 August.

How fortunate she is that the mainstream media don’t seem to see the CEPU and Unions NSW comments as newsworthy.

The CEPU’s central points in its submission are also worth highlighting.

It says:

(1) It is vital to ease the burden of the higher energy prices on low income earning consumers in part caused by the transition to a cleaner future. We propose a scheme to be implemented for low income earners to access renewable energy and smart metering technology. (How does Wayne Swan feel about this? Under the Oakeshott approach, wouldn’t any such expense fall to the federal account?)

(2) Productivity and efficiency in energy companies should not be at the expense of jobs. The saving is an illusion. The actual cost to the economy of job shedding due to cost cutting should somehow be counter balanced against the cost of keeping workers in employment. (I particularly like that “somehow.” As someone else once said: “Please explain.”)

(3) Labour costs should not be constrained by the guesstimate approved by the regulator as part of operational costs for the current regulatory period. If labour costs exceed the estimate to maintain market parity, the energy company should not be penalised. (That is, the customers should pay.)

(4) Reliability of supply should not be sacrificed for cheaper energy bills. Compromising reliability by reducing investment in maintenance is a recipe for disaster. (Note to the tabloids: you called it “gold-plating,” remember?)

(5) Energy companies should be accountable for their investments. There should be checks and balances to ensure that the money approved by the regulator is actually invested in the projects (to which) the money was allocated.

How the select committee is going to work up a report by 1 November that delivers on the Prime Minister’s “big stick” agenda and fits with the tenor of submissions it has received is a fascinating thought.

How will Gillard juggle this, the energy ministers’ recommendations on regulatory changes and the energy white paper?

Does this still seem like such a good idea as it must have done in the PM’s office before she elbowed Ferguson aside to give that EPIA talk?

Doing it by numbers

You can demonstrate just about anything with statistics, depending on how you play with them.

So this week we have media running with the information that, according to a new report from the Australian Bureau of Statistics, our households are using 25 per cent more electricity than a decade ago.

Goodness.

Does it sound quite the same, however, when one also reports – using information from the Energy Supply Association yearbooks – that the number of households registered as electricity account holders has risen from 7.27 million at the start of the century to 9.09 million in 2010-11?

Yup, that’s an increase in the number of households of 25 per cent.

SBS News, for example, might have paused to ask the association a question before it ran its story that “electricity use is up 25 per cent despite price hike,” pointing to the “sky-rocketing” increase in power bills since 2007.

Yes, dears, that’s because there are a lot more account-holders over 10 years and we are mostly a lot more affluent, using many more air-conditioners, plasma TVs and other thirsty appliances.

And the combination of more demand and the need to replace old infrastructure as well as governments increasing network reliability requirements – and, most recently, green schemes like solar subsidies and the carbon price – has sent the prices up.

Context would be a fine thing, but we don’t get lots of that in the 24/7 – “look, there’s a rock” – media goldfish bowl and, as a result, we have a population with some skewed ideas of what is actually going on.

Using the ESAA yearbooks, one can also see that residential demand in New South Wales and the ACT has risen in a decade from 18.45 terawatt hours to 21.37 TWh, while Queensland consumption has gone up from 9.63 TWh to 13.09 TWh – and Victoria has moved from 12.26 TWh to just 12.71 TWh.

Victoria plus the jurisdictions north of the Murray account for 78 per cent of all household power demand in Australia – and residential consumption has gone up just under 17 per cent in this region in the decade.

By comparison, WA residential demand has risen 61 per cent in a decade. Hello, boom.

The Queensland comparison is an increase of almost 36 per cent, reflecting the shift in population to the State’s south-east, the marked increase in use of air-conditioning and, of course, the flow-through affluence from the mining boom.

The ABS stuff includes an interesting graphic – you can find the “Australian Social Trends” report on the Bureau’s site at www.abs.gov.au under the sub-title “Household energy use and costs” – setting out comparative energy use (in petajoules) by jurisdiction and energy form.

Thus, nationally, we see that households consumed 223 PJ of electricity in 2010-11, with NSW (and the ACT) using almost as much as Victoria and Queensland homes put together and all the other States together barely using more than Queensland.

Households also consumed 148 PJ of gas with Victoria accounting for 100 PJ – that’s the Sir Henry Bolte effect because the wily old Victorian Premier did a job on Esso and BHP in the 1960s to get really cheap gas on long term contracts from Bass Strait, resulting in a very high take-up of the fuel for cooking, heating and hot water in the State.

The two other forms of household energy – LPG and solar power – account for just another 22 PJ, or 5.6 per cent of consumption.

Economists can be a dry lot so we get the ABS spokesperson saying with a straight face that “We found that the types of energy most commonly used by households were petrol and electricity followed by natural gas.”

Yah, that would be right.

Mind you, I reckon the nation’s statisticians could do a little better than telling us that 74 per cent of energy consumption is by “industry.”

People out in the street need to be told that a great chunk of it is in commerce (that’s the shoppping malls and office blocks, folks) and public services (hospitals, school and other education institutions) and a growing bit in mining as well as the 30 per cent or so that accrues to factories. There’s a chunk that is used in public transport, too.

My point, of course, is that this is not about “us” and “them” but about “us” in many manifestations (householder, commuter, shopper, worker, small business persons) and “them” (who happen to directly employ a million of “us.”)

By the way, on the pricing issue, electricity bills nationally rose 72 per cent in the five years to 2012 – not a “shocking 72 per cent in 10 years” as reported by the News Ltd tabloids – compared with 45 per cent for gas and other fuels. The CPI increase was 15 per cent.

The biggest single jurisdictional energy increase was not for electricity – with Melbourne retail bills going up 84 per cent in five years and Sydney costs 79 per cent – but for gas in Western Australia: Perth’s household gas bills rose 88 per cent between June 2007 and June 2012.

What I can’t find reported in any of the media articles up on Google News today is this not unimportant paragraph in the ABS survey:

“In 2009-10 electricity, gas, heating oil and wood accounted for $32 per week of household expenditure. Although this was a real increase of nearly $5 per week (at 2009-10 prices) since 2003-04, the amount as a proportion of total real household expenditure remained at 2.6 per cent.”

The ABS adds that 13 per cent of households were under financial stress in 2009-10, reporting being unable to pay electricity, gas or telephone bills on time.

I should think the figure is higher now, but we still lack a decent piece of analysis as to what’s causing this stress. Instead, we get the tabloid talk, sooled on by the Prime Minister, that “power prices are the new petrol prices.”

Well, there’s a bit more to it than this, don’t you think?

En passant, I note that a survey last year found that less than a quarter of the nation’s flats, units and apartments had insulation and almost a third of all households didn’t have it. (The rented houses would help to push that figure up.)

What this stat doesn’t throw up is that most Australian homes also have some of the poorest glass in the developed world, with consequent impacts on energy consumption for heating and cooling.

Something like 55 per cent of the heat lost from buildings in winter literally goes out the windows.

It’s a complex story and not made easier to understand through the way it is communicated by media, lobbyists, ideologists or pollies.

On the facile front

This is a banner year for the armchair jockeys.

It is so much easier to manage a market or a company, to design a policy, to regulate an industry or to run multi-faceted industry associations from a comfy chair than it is in real life and the jockeys in the energy field are absolutely spoiled for choice at the moment.

It’s risk-free, too – no pesky customers, shareholders or voters to hold you to account.

“Facile” is the adjective that springs to mind most often when I contemplate the jockeys – offering allegedly neat and comprehensive solutions by ignoring the complexities of an issue is the dictionary definition.

Being “facile” is infectious.

It spreads from armchairs to news-sheets and current affairs programs and in to the corridors of parliaments and ministerial offices, as illustrated in the current national debate by examples too numerous to canvass.

The jockeys can expect, and do get, lots of media attention because they offer “color” and controversy, the staple ingredients of 24/7 news coverage.

“Gouge” and “goldplate” and “gaming” resonate with listeners and readers while the explanations from service suppliers don’t meet the “30-second grab” test.

Fortunately, there are also more than a few people out there trying to keep lights burning on the hills and in the valleys.

They are to be found in some NGOs and think tanks, some consultancy services, some government departments and at least some ministerial offices as well as in companies.

Toss aside the “they would say that wouldn’t they” contributions by the commentariat to current reviews – to the Senate select committee on power prices, the Climate Change Authority on renewables and the Australian Energy Market Commission on energy regulation to name three – and there is a fair amount of genuinely hard thinking on the current record about issues that will impact on the security, affordability and environmental quality of our energy supply over the next decade or even two.

I find it amusing to hear the armchair riders reacting to such detailed contributions by complaining that they and their followers are being “drowned in a sea of boring documents.”

It is so much easier to free-wheel across the wave tops, flinging off insults, assertions and “clever” ideas with abandon, than to struggle to find a sensible port.

No less amusing is the complaint that large energy supply companies, operating multi-billion dollar businesses with millions of customers and large numbers of shareholders, have the temerity to dedicate substantial teams of staff to addressing the key issues, thereby unfairly wearing down those “outside the club.”

It is less cause to smile when a politician like Senator Nick Xenephon buys in to the first public hearing of the Senate committee on power prices with a question/assertion about the remuneration of major company CEOs as a factor in the unhappiness of household customers over more expensive bills.

Xenephon has a sharp mind and there many examples of him bringing it to bear on issues.

Here, he is simply playing to the gallery and I wish he had been asked in return whether (a) he expects major companies to employ lowly-paid CEOs to manage major parts of a key service and (b) if he has paused to think about what a tiny fraction of householders’ bills is represented by their individual share of even the largest executive pay packet?

He, and members of the select committee, also need reminding that the main issue about which Julia Gillard’s government, who set them on this task, is complaining – the current outlays on networks – flows from politically-motivated efforts a decade ago to hold down electricity prices by keeping delivery capex as low as possible and now by regulators permitting large outlays when faced with surging demand (most certainly the case in 2007-08 when bids were being made and determinations handed down for 2009-14), high reliability standards (set by politicians) and the threats to security from a lot of aged equipment.

Not to mention a drive by consumers to acquire air-conditioning and other energy-intensive gear, thus contributing to the most expensive capex need of all – power demand peaks.

To which, of course, needs to be added the political actions with respect to renewable energy, including the rooftop solar schemes, universally badly planned and implemented, and the carbon tax.

Easier by far to be populist and facile than to confront the tough questions raised by all these issues.

However, it is also easy to lose sight of the fact that, amid the armchair riders’ attention-seeking stridency, the hard yakka on power issues continues to be pursued.

I understand the nation’s resources and energy ministers are bringing forward their meeting under the CoAG umbrella to November to enable them to feed recommendations to December’s meeting of first ministers, driving their public servants and advisers still harder to complete their current work.

Meanwhile, in Victoria today, the Baillieu government has taken another step towards one of the most important aspects of addressing household power pain: it has introduced a voluntary flexible pricing plan to provide residential users with more options than paying a flat rate for the electricity they use.

At present 12 per cent of Victorian households and 20 per cent of business customers already access flexible electricity rates.

Under the State government approach, just announced, customers can try the flexible pricing system and back out again if they wish.

Energy Minister Michael O’Brien is pointing out to them that they already make use of peak and off-peak rates in services as diverse as public transport, flight tickets and telephones.

The electricity infrastructure system is currently inefficient, O’Brien notes (a point that applies across the country, not just in his State), with a quarter of the Victorian power system in use six days a year.

Research earlier this year showed that Victorian householders are wasting $200 million annually by failing to plug in to the cheapest power deals available to them in a highly competitive local market and that 700,000 account-holders, about a third of the total, are still on the most expensive charges.

Energy Retailers Association CEO Cameron O’Reilly made an important point when he appeared before the Senate committee in Sydney yesterday: the best way forward on the east coast is through a competitive market and greater consumer education, facilitated by technology like smart meters, not through heavy-handed price and other regulation.

The armchair jockeys to a large extent don’t want to hear this because, regardless of what they may claim, their bent is towards government command and control in order to achieve their ideological choices relating to carbon emissions and “distributed generation.”

From where I am sitting, now retired from 33 years in the engine room of energy industry issues management, the companies and their representative associations need to do more than rev up their messages when government and parliamentary inquiries are being held.

The current crop of submissions demonstrates that there is a major amount of useful information available from the supply business, however “boring” some may find it.

Suppliers need to package this better and to do a great deal more to communicate with the consumers/voters rather than leaving the field to the armchair riders as much as has been the case in recent years.

Objective observers know that a lot of engineering and technology management in Australian energy supply is world class – and the industry’s communication skills need to be of the same standard.

High voltage debate

The ruckus over the RET is being ratcheted up as submissions continue to flow in to the Climate Change Authority, which has embarked on a review of the renewable energy target for the federal government.

“Renewable industry’s counter attack on TRU and Origin,” says one headline in the often angry electronic crannies of the media dealing with carbon-related energy issues.

An Australian Associated Press report, published in “Climate Spectator,” is headlined: “TRUenergy says RET will cost $25 billion too much.”

“Global energy giants say leave renewable target alone,” says another report. (The giants are Korea’s Samsung and Europe’s Alstom.)

“Regulator wants energy target dumped,” says the “Sydney Morning Herald.”

(The regulator is New South Wales’s Independent Pricing & Regulatory Tribunal and it was making a submission to the Senate inquiry on power prices, drawing an accusation from the Total Environment Centre that it has “lost touch with the future.”)

“RET falters as splits in energy sector mount,” declares “The Australian” newspaper.

And it publishes an Op-Ed comment by the Australian Coal Association CEO, Nikki Williams, under a heading “Please get rid of the renewable energy target.”

The paper also runs a piece headed “RET ‘benefits’ demand scrutiny,” reporting that the Newman government in Queensland wants the issue referred to the Productivity Commission.

The point at issue here is the State government’s assertion that renewable projects need to justify their cost by achieving efficient carbon emissions savings.

At the other end of the spectrum, much of the commentary seems to relate to contrasting what is being spent here, or could be, versus the massive outlays on renewables in places like Germany (which is in the throes of undoing its abatement program by closing nuclear power stations and increasingly relying on fossil-fuelled ones to fill the gap despite the Merkel government’s “more green” rhetoric.)

“Australia risks missing out on green energy investment,” warns “Crikey” electric newsletter.

Its stablemate, “Climate Spectator,” attacks some participants in the review over the difference between past views and current positions under the heading “The great renewables backflip competition” – and it also sails in to the Coal Association in a commentary titled “Big Coal’s fight to the death with renewables.”

David Green, the new Clean Energy Council CEO, is reported as warning that “Any changes to the RET will remove investor confidence in clean energy.”

The Climate Institute elaborates: “Arbitrarily reducing the target will impose costs, in policy uncertainty and risk, financial impairment of existing investments and higher fuel and carbon costs. It will also threaten the diversification of Australia’s energy portfolio.”

The institute observes in its submission that the RET has helped fuel investment of $18 billion in generation since John Howard’s government introduced it in 2001, $10 billion of which has been spent since the Rudd/Gillard governments changed the measure in 2009-10.

Most of this outlay has gone on wind farms, which in 2010-11, according to the ESAA yearbook, delivered 5,848 gigawatt hours of the 228,067 GWh total production of grid-connected generation.

Of course, a messed-up RECs market, courtesy of the present government’s desire to promote rooftop solar power, has seen investment in large-scale renewables falter, falling from $2.5 billion in 2010 to less than a billion dollars last year and just $165 million in the first half of 2012.

The renewables sector asserts that the RET needs to be held at its present level to enable more than $13 billion to be spent by 2020 to add another 7,000 MW to capacity (mostly wind power).
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The Climate Change Authority, chaired by former Reserve Bank and former federal Treasury head Bernie Fraser, is required to make its views known to the government by New Year’s Eve.

So far the CCA has published 97 submissions on its website and there will be more to come.

Any brief report on the review, here or elsewhere, is going to cherry pick from submissions – and the big shadow hanging over the whole issue, as with so much else, is the outcome of the next federal election.

Whatever the CCA recommends and whatever Greg Combet and federal cabinet decide, the renewables sector will be waiting on the election outcome and, should the Coalition win, on how it interprets its oft-repeated commitment to the RET.

One of the few things on which there seems to be unanimity is the view that the government’s policy for biennial reviews of the RET is nuts and must create enduring lack of confidence in investors as well as inflicting the present noisy debate on us over and over.

The Climate Institute stresses in its submission that “our nation’s energy sector will need to be decarbonised before the middle of the century” – but, of course, that is not where we are heading on the present state of policies and technology development.

The government’s own modelling for the “clean energy future” relies on as much as a third of generation in 2050 being fossil-fuelled using carbon capture and storage and almost a quarter being geothermal.

On the other hand, the Bureau of Resources & Energy modelling sees us with half our generation from conventional coal in 2030 and 30 per cent using gas, with conventional hydro-electric providing another four per cent, leaving RET-style generation providing not much more than 16 per cent of power needs.

If you want to look out to mid-century on this basis, the critical issues are whether or not CCS is commercially viable, whether or not adequate storage sites are available and how geothermal power can be lifted from its present troubled state.

That’s not what the RET review is about.

And then there is Origin Energy,which, having raised the ire of the renewable sector by suggesting the current RET should be cut back in recognition of the decline in electricity demand, is still promoting plans for the largest single green generation development.

The company’s new annual report, just released, says that feasibility studies in to its proposed Papua New Guinea hydro-electric project (to be linked to northern Australia by undersea cables and to the Queensland grid by a long new land line) “have shown positive results, including an increase in the anticipated installed capacity of the scheme to 2,500 megawatts.”

Of course, it is just not possible to have a serious debate about the real purpose of the RET – to reduce carbon emissions – without bringing up the nuclear issue.

Energy industry veteran Barry Murphy, whose career included decades in senior management and board roles, has contributed a personal submission to the CCA in which he observes “the current Australian government policy of not even thinking about how to access nuclear power is short-sighted and likely to leave us stranded when the tide in favour of fossil fuels recedes.”

He adds: “Renewables have a place, but objective analysis will show they can’t do the whole electric power job on the scale required to combat climate change while maintaining our economic growth and standard of living.”

The Minerals Council of Australia has sought to take the high ground in the debate by asserting that the RET is “a contradiction to the central policy goal of a properly-designed, technology-neutral, least-cost emissions trading scheme introduced in a phased manner and aligned with international efforts.”

What seems most clear is that, even when the CCA report has landed, the core debate on this issue remains to be resolved – and neither the Gillard government nor the Coalition has its head around the main game at present.

Unfortunately, this continues to be a debate about what various people want rather than what is needed to deliver an agreed large abatement outcome at the least cost while sustaining electricity supply security.

Right place, right time

When Jamie Turmanis and I sat down in a Sydney CBD hotel coffee shop earlier this year to talk about staging a conference on rising uncertainty in the east coast electricity market, it was obvious that around now would be a useful time to hold the event.

Even so, we could not imagine then how many developments would occur to emphasize the usefulness of this conference – which is being held in Sydney on 17-19 October.

We knew that the Climate Change Authority would be up and running and would have an important review of the renewable energy target as its first priority although this seemed less likely in the early part of 2012 to become the fierce arena for debate that has emerged, pitting the major energy retailers against each other on the future of the RET.

We also didn’t imagine that the federal government would up-end the “clean energy future” policy by abandoning its 2015 carbon price plan and embracing membership of the European Union emissions trading scheme, a development that changes the market paradigm substantially.

And we didn’t imagine that the Prime Minister would hurl herself in to the power price debate with such vigor – via her “I have a big stick” speech to the Energy Policy Institute of Australia last month – or that her government would follow this up with an agreement with the Greens to launch a Senate select committee on electricity prices, due to report a fortnight after the “Eastern Australia’s Energy Markets 2012-2025” conference.

Nor did we anticipate that the independent MP Rob Oakeshott would try to seize the Prime Minister’s “big stick” by initiating a private member’s bill seeking to impose federal control over the National Electricity Law (see my previous post on this site, “The Oakeshott intervention,” 22 September in which I point out why this is not likely to be greeted with cheers by State governments).

Of course, we had in mind the Australian Energy Market Commission review of network regulatory rules on the back of Australian Energy Regulator concerns about its powers, but we couldn’t have appreciated back then that Julia Gillard’s “big stick” speech would drive what, in effect, has become an emergency meeting of the Council of Australian Governments in December, with the State governments now under pressure to reach an agreement with the federal government on a range of issues “or else.”

We did hope that the federal government’s energy white paper might emerge in its final form around October – and recent comments by Resources & Energy Minister Martin Ferguson indicate that late next month is when it will appear.

One of the key issues the white paper has to address is the availability and cost of gas for the “NEM” and its implications for both power generation and the manufacturing sector – and the conference has a large segment, including ACIL Tasman’s Paul Balfe, the Australian Aluminium Council’s director Miles Prosser, Manufacturing Australia chairman Dick Warburton and the APA Group’s Rob Wheals to deliver keynote talks on the situation plus a strong panel to discuss the rising cost of gas for domestic use.

Given the implications of gas availability and cost for the east coast market, not least for the million New South Wales customers who rely on expiring interestate contracts for 95 per cent of their supply, one might argue that this is the most important energy issue of this decade, although no doubt others will have different views.

All things considered, Turmanis and I are feeling quite pleased at present with the agenda that we and the conference advisory panel (Ralph Craven, Michael Dureau, Robert Pritchard, Hugh Outhred and Balfe, all highly regarded figures on the energy scene) have devised.

It seems to be very much a case of having the right people to talk about the right issues at the right time.

Examples in point include:

TRUenergy’s Mark Collette to talk about “building a diversified energy company in a carbon-constrained world” at a time when his firm is front and centre in market attention because of its delayed IPO, the collapse of the federal government’s efforts to buy closure of Latrobe Valley generators to achieve carbon abatement and its strong views on the future of the RET.

A keynote talk by the AEMC chairman, John Pierce, on improving efficiency of investment and consumer choice in the “NEM.”

A panel discussion on the future of the carbon price regime featuring Balfe, the Grattan Institute’s Tony Wood, Outhred and Baker & Mackenzie’s Martijn Wilder.

A Q&A roundtable on the energy white paper featuring Pritchard, Collette, AGL Energy’s Tim Nelson and three industry association managers who are in the thick of things (Matthew Warren, CEO of the Energy Supply Association, Malcolm Roberts, CEO of the Energy Networks Association, and Ramy Soussou, deputy CEO of the Energy Retailers Association).

Everybody now has a view about electricity networks and this conference is going to include a strong focus on the sector, with a keynote address by Peter McIntyre, TransGrid CEO and chairman of Grid Australia, as one of the highlights.

This past week I had the opportunity to participate in a small way in the first annual conference of the federal Bureau of Resources & Energy Economics and was struck all over again by the astonishing range of information the agency, part of Ferguson’s portfolio, is producing.

One of the big ticket issues on the “NEM” agenda at the moment is what the generation mix should look like over the next two decades and BREE executive director Quentin Grafton is going to participate in the mid-October conference to examine the agency’s energy projections out to 2034-35.

The conference advisory panel has coupled this presentation with one from AGL’s Nelson on the need for new generation capacity in the “NEM” and backed them up with a panel focussing on the peak power issue that will include Grafton, Nelson, Dureau, Clare Petre, the NSW energy and water ombudsman, and Tim Reardon, executive director of the National Generators Forum.

I am pleased to say that the 2012 edition of my “Powering Australia” yearbook is being made available by Focus Publishing for attendees. The yearbook will be officially launched in the second week of October by Martin Ferguson, the fifth year in a row he has kindly done the honours.

Unfortunately, he will be overseas when the “NEM” conference is held, but I imagine that his political opponent, Ian Macfarlane, the Coalition’s energy spokesman, will be an equally large drawcard, with the federal election looming (and renewed suggestions by some in the media commentariat that Julia Gillard may go early to the polls, although the independents are insisting that the minority goverment agreement that the parliament will run full term should prevail).

Macfarlane has committed to speaking to the “NEM” conference about the future for the RET under a Coalition government – and that alone should ensure that there is a strong focus on what he has to say.

I have been engaged in managing and participating in energy conferences since 1980 and I must say that few over the years can rival the “NEM uncertainty” event for being in the right place at the right time.

The Oakeshott intervention

Just when it seems the work basket for electricity policy is overloaded to bursting point along comes the Member for Lyne.

We are now less than 100 days away from the Council for Australian Government having to make decisions about energy regulation after its resources and energy ministerial committee has considered work undertaken by the Australian Energy Market Commission.

At the same time we have the Climate Change Authority reviewing the renewable energy target, a task that has been cranked up to feverish contention by elements of the green commentariat.

Meanwhile, in the wake of the Prime Minister’s shoot-from-the-hip (or should that be lip) warning about rising power prices in August, we now have a select committee of the Senate tasked with reporting by 1 November on a range of related topics.

In addition to which we await the AEMC’s “power of choice” review, which is directed towards consideration of how to address the ongoing peak demand problem. (The answer is well known – go for a wider roll-out of smart meters allied to time-of-use charges – but the spirit among State governments is far from willing.)

Over-arching the whole shebang, of course, we have the federal government’s variegated climate change policy from which in recent days has been yanked the plan to close down some emissions-intensive power stations and to which has been added our inclusion as a colony of the European Union’s emissions trading scheme.

More than enough to be going on with, you may think, but now we have Rob Oakeshott MP proposing a private member’s bill that would overturn the present “small F” federal electricity market law and put the national government in charge of retail electricity price legislation.

Robert Pritchard, executive director of the Energy Policy Institute of Australia, has reminded his members that Julia Gillard, speaking at the EPIA lunch last month, said: “My preference is to work co-operatively with the States through CoAG to deliver a better outcome for consumers. We won’t lightly use the big stick of regulation, of stronger powers for the energy regulator and the ACCC. But it’s a stick we hold and which we’ll use if required.”

Oakeshott, observes Pritchard, seems to have seized the Prime Minister’s stick before she decides to use it herself – and he must have kept the Office of Parliamentary Counsel busy for some time because his draft bill runs to 282 pages.

Which raises in my mind the question of what Julia Gillard knew and when she knew it?

Has Oakeshott been encouraged to go down this path to avoid the inconvenience of a cabinet debate on what is actually a hot button issue with the States?

How could the federal government have been unaware that Parliamentary Counsel were engaged on a task of this size?

The bigger question is how will the premiers of Western Australia, South Australia, New South Wales, Queensland and Tasmania react to a king hit of this kind if it turns out that the government will support the Oakeshott bill in parliament?

(You can pretty well bet that the Greens will support it.)

Bob Pritchard, emphasizing that this is a personal view and not EPIA’s, has responded to me thus: “ This is still more than a little hypothetical, but, if the Gillard government is minded to get behind the Oakeshott bill, the Australian Energy Market Agreement among the Commonwealth and the States would need to be amended. This would require the agreement of the States.

“Although the AEMA is not legally binding, the Commonwealth would not lightly wish to be a party to the breach of such an important instrument of co-operative government.

“If the States did not agree, the Commonwealth would need to consider withdrawing from the AEMA.”

All of which, of course, takes us to the next CoAG meeting where, surely, the Prime Minister will find herself being asked straight up if her government plans to support the Oakeshott intervention?

(His rationale, by the way, is “the current NEL is national law in name only – the State governments own the rules and in some cases own the monopolies as well.” He wants to “bring the federal regulator firmly under federal laws with stronger powers to to moderate power bill increases.”)

Perhaps the great irony of the situation is that the comments Oakeshott has made in revealing the bill’s existence all go to the populist end of the equation but any central regulator worth its salt would endorse a pricing regime reflecting the cost of supply.

As well, is he proposing that the Australian Energy Regulator should both take responsibility for approving capex and opex allowances for networks, the main driver of current price rises, and for the final price for consumers?

How will Colin Barnett, with a 2013 election looming in the West, respond to government in Canberra seizing control of WA electricity prices?

Barnett, you will recall, inherited a horrible situation where WA Labor had suppressed power bills for a decade, building up a billion dollar burden on central revenue that was heading towards $3 billion later this decade. His efforts to make power bills more cost-reflective, with increases of more than 50 per cent to date, have been contentious to put it mildly.

Now, what would a national government, committed to cost-reflective pricing (because that is what the forthcoming energy white paper is expected to confirm), do about power prices in the south-west intergrated system, the network serving the populated bottom end of WA?

One could go on about the implications for Queensland and NSW, too – and South Australia also faces an election next year – but the WA perspective serves to illustrate that the Oakeshott intervention more resembles a political land mine for the federal government than a clever strategy.

Julia Gillard’s problem is that she will be confronted in the very near future with both a Senate committee report – will it endorse the Oakeshott proposal? – and the CoAG meetings of energy and first ministers.

This proposed bill will be a very large elephant in the CoAG meeting rooms, the more so because of her “big stick” threat.

If, in fact, there has been some form of complicity between the Prime Minister’s office and the Member for Lynne on this issue, it might end up joining the infamous list of “it seemed a good idea at the time” ideas rather than the much shorter list of brilliant manoeuvres.

Meanwhile, it will be ever so interesting to discover what the Prime Minister thinks of this big stick now someone else is waving it around. Perhaps the Canberra Press Gallery could ask her?

Senators go on the road

The strong flow of submissions to both the Senate select committee on power prices and to the Climate Change Authority’s review of the renewable energy target is providing a rich vein of information about electricity supply – and the former can be expected to gain more media attention in the fortnight ahead when senators hold public hearings in Sydney (Tuesday), Melbourne (Wednesday) and then Perth and Brisbane the following week.

One of the Senate committee submissions is from Energetics, signed by its CEO Tony Cooper.

The consultants make some good points, I think.

In part, Cooper writes: “Energetics believes that the design and operational constraints on the networks to meet very stringent reliability standards, coupled with their operational expertise (being) focussed on supply side rather than demand side options, means that operators are very reluctant to consider non-network alternatives when planning expansions and upgrades.

“Further, except for very recent times when power prices have been rising rapidly, State and federal politicians and administrators have been more concerned about avoiding interruptions than deferring expenditure.”

Energetics wants to see changes to regulation to incentivise demand side activities, a move that the Australian Energy Market Commissions seems to be embracing in its recent look at NSW distribution services.

The consultants join other critics of the electricity supply forecasters, arguing that demand projections have been “systemically over-estimated” in recent years.

Not surprisingly, Energetics speaks up for implementing time-of-use charges to deal with the continuing growth of peak demand.

It is hard to find anyone knowledgeable about the industry who is opposed to this move.

The consultants add that they favour critical peak pricing coupled with enabling technologies to allow direct control of air-conditioning units.

It is politics that stands in the way of ToU being embraced – State governments, regardless of their color, just don’t want to get on with the job for fear of consumer and voter backlash.

The real problem area in this regard is low-income and fixed-income households and Energetics observes that (1) they are currently being penalised by soaring prices anyway and (2) governments have the means to compensate them without distorting the electricity market.

Of course, the critical issue in introducing ToU pricing is a full-on consumer information campaign allied to appropriate steps to look after vulnerable consumers. How hard is this, really?

Energetics makes another point that is worth attention: incentive measures to deal with demand need to be targeted, taking in to account the localised nature of demand rather than broad-based views across a network.

As an example, it says “resident solar PVs are not a cost-effective solution when seeking to reduce late afternoon/early evening summer peak demand in a residential-dominated network area. There is not a good coincidence between peak output from solar PVs and the late afternoon peak when air-conditioners are switched on.”

The problem with the Senate inquiry and the CCA review is that they are political ploys – the first to reinforce Julia Gillard’s “I have a big stick” speech last month, about which I have written at length here and elsewhere, and the RET review is part of the price the Gillard government has paid to bring the Greens onside in the carbon price negotiations.

Despite this, both the select committee and the CCA have opportunities to add some commonsense to the current debates about both power prices and renewables – which are OTP far too much of the time.

Neither is going to be able to complain that it has not received lots of information and advice.

The challenge in both cases is to sift good advice from self-interested and/or ideological pleadings.

For one, I’d be happy to see the senators embrace this statement from the Business Council: “Electricity prices should reflect the efficient cost of providing electricity to end-users. Prices should not be artificially held below efficient costs as this can result in under-investment which can exacerbate price outcomes in the longer-term. In particular, retail price regulation and/or government intervention should not be used to artificially hold electricity prices below their efficient levels.”

I’d like to see Christine Milne, who has put herself on the select committee as the Greens representative, sign up for that.

Going beyond the Senate inquiry, I would also like to see federal cabinet embrace the BCA principle as part of the energy white paper – which is due for release late October.

The best example of why this issue is important can be found in Western Australia, where Labor governments lowered power prices way below cost-reflective levels over a decade and their Coalition successor is finding it almost impossible to go the whole way to putting an end to a pernicious practice.

Finally, I note that the investor-owned Victorian distribution businesses have made a neat point in their collective submission to the Senate committee.

“Consumers,” they write, “expect an electricity supply which delivers to their needs across seasonal extremes and supports an ever-evolving range of electrical appliances and technologies.”

Which is why, you see, when the AEMC recently undertook a survey of 1,200 consumers in NSW, some 60 per cent of respondents indicated that they were actually prepared to pay a bit more to gain greater reliability of supply.

If the Senate inquiry does no more than teach the Prime Minister, and other politicians, that the electric power business is about a lot more than sloganeering and populism, it will perform a useful service.

Where we stand price-wise

Readers will remember the fuss made earlier this year when energy-intensive users claimed Australian electricity prices were among the world’s highest.

In response I posted a commentary on this site (“Shocking news,” 26 March) that highlighted the NUS Consulting Group review of industrial power charges for 2011 – in which Australia ranked thirteenth cheapest out of the 16 countries surveyed.

NUS has now published its 2012 review and this shows Australia led this group of countries in the past year in industrial power prices rises but was not alone in pushing up costs – the increase here was 27.8 per cent, exceeding South Africa’s 23.1 per cent, Sweden’s 22.8 per cent Italy’s 18.4 per cent and Britain’s 12.3 per cent.

The new NUS review has shoved Australia five places up the table to seventh most expensive, still a long way short of the priciest nations in Europe but also now a lot more expensive than the lowest-cost countries in this survey.

Numbers like these are an additional reminder of why the uncompetitive Australian automotive industry and the struggling steel industry, to name but two, are unhappy about our energy costs.

NUS doesn’t include South Korea, Japan or Brazil in its comparisons – and it doesn’t deal with developing economies, often the biggest competitors for Australian businesses.

The Brazilian situation is particularly interesting at the moment because President Dilma Rousseff has intervened this month to announce huge electricity bill cuts – saying industrial charges will fall by up to 28 per cent and residential bills by 16.2 per cent on average.

The changes will take effect in the world’s sixth biggest economy early in 2013.

Brazil’s average electricity cost has soared with the economic boom there despite the country relying substantially on hydro-power – and current industrial prices are exceeded only by Italy and Slovakia, according to a Reuters report.

One of the outcomes has been the exodus of Brazil’s aluminium industry.

Manufacturing production there has fallen 5.3 per cent in a year and industrialists are pointing out that power bills are only one aspect of the so-called “Brazil cost” – others being high taxes, too much red tape and bottlenecks in developing essential infrastructure.

(Does this list have an oddly familiar ring to it?)

The 2012 NUS ladder in descending order (from the most expensive) and in US cents per kilowatt hour reads like this: Italy (20.23), Germany (15.15), Portugal (13.63), Spain (13.52), Britain (12.45), Belgium (11.92), Australia (11.68), Netherlands (11.28), Austria (11.05), Poland (9.3), South Africa (9.13, America (8.89), France (8.76), Finland (8.64), Sweden (7.95) and Canada (7.58).

NUS notes that the Australian increase represents the impact of higher network charges and the introduction of the carbon tax.

It points out that the local commodity cost of electricity actually decreased by 5.13 per cent over the past year, highlighting the impact of network prices in particular.

The consultants also provide a review of gas prices for the same group of industrialised countries.

Here Australia is the third cheapest of 16 nations, outdone only by the United States and Canada.

Of course, manufacturers on the east coast here are freaking out over the prospects for gas prices going much higher in the wake of the Queensland LNG developments.

Domestic gas prices are around $2.60 per gigajoule (in our money) in the US and $2.10 in Canada. This compares with $8-12 in Western Australia at present and $4-6 on the east coast, with some new contracts reportedly being signed as high as $10.

For Australia, NUS comments that forward pricing for gas reveals modest increases are likely in the next year but sharp rises can be expected from 2014 when the flowback from LNG exports starts to impact on the east coast.

The notable feature of the gas table is the huge reduction in the American prices, brought on by the shale revolution – a fall of 27.8 per cent where Australia recorded a year-on-year rise of 10.8 per cent.

The most expensive four countries on the gas ladder are Sweden, South Africa, Finland and Germany.

While most of the local media coverage on energy price rises focusses on households, their role in adding to input cost pressure for manufacturing is a key current economic issue, helping to exacerbate a situation where, as was recently reported, Australia has become the world’s sixth most expensive place for this sector, mainly as a result of the exchange rate.

Up until about 2008, manufacturing costs in Australia were cheaper than in the US, reports say, but now they are about 20 per cent higher.

American industrial power prices fell by 6.2 per cent between 2011 and 2012, according to the NUS survey, mirroring the impact on generation costs of a large decrease in natural gas prices.

(On the other hand, American residential power costs rose by about one per cent and average 11.91c per kilowatt hour at present, according to the US Energy Information Agency, compared with the NUS industrial figure of 8.89c.

(The key driver of these household prices, Australians will not be surprised to hear, is the cost of actually delivering electricity – the networks.

(These account for 40 percent of the US household bill on average and have been rising fast, eating up any potential savings from the lower wholesale cost. production of electricity. Like here, American networks are in a large investment mode, spending about $US27 billion annually, after years of reduced capex activity.)

The power supply environment, both here and abroad, is not uncomplicated, but the new NUS material highlights the fact that, whatever the reasons for local increases (beyond the pejorative “gouging” some highlight and the inefficiencies others allege), Australia is no longer a cheap place for electricity – and this was happening without carbon pricing.

We are still waiting for an in-depth analysis of what this portends.

Twisting in the wind

I enjoy a challenge, so I rose to the bait when a lunch companion asserted that there is now nothing that can be said for certain about electricity supply.

Not so, I responded, here’s one solid fact on which you can rely: north of the Murray over the next decade we will have most of our electricity supplied by burning black coal.

It’s true that the ownership of the black coal generators in New South Wales is up for grabs, but that doesn’t infer – except for the madder version of anti-privatisation persons – that there will be any change in supply.

Given that the two States north of the Murray account for 4.8 million of the east coast’s 7.9 million residential power accounts and 587,000 of the region’s one million business customers – meaning 115 terawatt hours of annual consumption out of the “NEM’s” 192 TWh – this story of black coal supply is significant.

Viewed in terms of the energy content of fuel consumed in east coast power stations, measured in petajoules, black coal represented almost 52 per cent of the 2010-11 total. It is most unlikely, on the current demand and supply outlook, to represent very much less in 2020.

What this means is that about 415 million tonnes of black coal will fuel power generation in the two States over the rest of this decade.

To be sure, in NSW, there are issues towards the middle of the decade about coal contracts, prices and the availability of the Cobbora mine – a project embarked on by the Labor State government to address perceived future cost escalation – but not about fuel use, at least not in my book.

The two biggest fuel challenges NSW faces this decade are the availability of gas (and its price) and how the State can meet the promised substantial increase in domestic renewable energy generation (as per the new government plan announced last week).

Introducing a talk to its Sydney lunch on 25 September by NSW Resources & Energy Minister Chris Hartcher, the Committee for the Economic Development of Australia comments that the State “could face significant energy supply challenges, with gas contracts expiring at the end of 2017 resulting in more than a tripling of prices for more than a million NSW gas consumers.”

These cost projection may be a bridge too far, but directionally CEDA is right and I will be more than a little interested to hear how Hartcher handles this and other issues.

What is beyond debate, I’d suggest, is the need for the NSW government, and that in Queensland, to embark on production of a longer-term energy strategy.

Western Australia has recently published its version, looking out to 2031, although this product of a lengthy gestation period tends more towards rodent than elephant and shows signs of the Barnett government having both eyes fixed firmly on next year’s State election.

The O’Farrell and Newman governments notionally have the luxury, riding on gi-normous majorities from recent State elections, of expecting to be in office for the rest of the decade.

With this, I suggest, comes the responsibility to address a longer-term outlook and set of policies for energy supply and electricity supply in particular.

In the case of NSW, more than 4,000 MW of existing black coal generation starts closing on its use-by date in the ‘Twenties, beginning with the 2,060 MW Liddell power station, which will be 50 years old in 2022.

It is fanciful to see this level of capacity being all replaced by wind farms.

The policy Hartcher announced earlier this month focuses a bit on geothermal energy – but two critical factors are the current state of technological and commercial development of this source and the fact that likely supplies are separated from the eastern grid by the lack of about a billion dollars worth of high voltage transmission lines.

The O’Farrell government has the Legislative Assembly’s Public Accounts Committee looking at prospects for future generation, but the inquiry seems to have gone to ground and there is nothing on the website to suggest next steps.

The other inquiry currently under way – the review of the RET by the Climate Change Authority – has resonance for both Queensland and NSW and it will be the year’s end before we hear CCA’s verdict (and the Gillard government’s response).

The extent to which the O’Farrell government can deliver on any renewable energy ambitions will depend to a substantial extent on the future of the RET and also on whether the Clean Energy Finance Corporation can survive.

Given the strong reliance of both NSW and Queensland on black coal, the ongoing approach of the present federal government and of the Coalition to supporting carbon capture and storage will also be important to longer-term abatement ambitions.

We are awash in opinions at present on whether the RET should be retained in its present form, reduced to 20 per cent of a diminished power demand projection or closed down altogether.

It is hard to see the mainstream parties embracing the latter idea.

The latest contributor to the debate is AGL Energy.

Where the other two of the “big three” energy retailers, Origin Energy and TRUenergy, want to see the RET retracted to 20 per cent of whatever consumption actually is, AGL argues for its retention in its present form.

The company says (correctly) that investors in power generation capacity (of all kinds) and associated infrastructure require stable policy.

It asserts RET changes will not be welcome to investors.

“Constant review is not reform,” it adds, arguing that amendment to the RET aimed at alleviating today’s electricity price pressures will, in fact, be a more expensive option for consumers than leaving the policy in place.

All of which provides reasons for going along to hear Hartcher at CEDA and also to join me at the “Eastern Australia’s energy markets 2012-25” conference in Sydney on 17-18 October where a strong cast is being assembled to focus on managing rising uncertainty in the “NEM.”

(Adverts for the “uncertainty” conference are on this website.)

Consumer perspective

While some media attention is being given to the Climate Change Authority’s review of the renewable energy target, another important area of focus in Canberra on energy issues at the moment is the Senate select committee on electricity prices, chaired by Senator Mark Thistlethwaite.

Submissions to the review have just begun to trickle in – the committeee is required to report by 1 November – and the Coalition has got round to nominating its three senators to make up the eight-person membership.

They are frontbench senator Mathias Cormann (Western Australia) and senators Sean Edwards (South Australia) and John Williams (the National Party whip in the upper house).

(My post on This is Power of 1 September – “Power capers” – dealt with the other members, who include Greens Party leader Christine Milne.)

The first cab off the rank in submissions to the committee is the Melbourne-based Consumer Utilities Advocacy Centre, which has made a number of good points.

For a start, noting that the carbon price and some renewable energy schemes are expressly designed to increase electricity prices to achieve environmental outcomes, CUAC highlights the need for policymakers to ensure that the social and environmental outcomes of such programs outweigh the costs.

This is not a minor point and all too often ignored in the hoopla greeting new stabs at pursuing our “clean energy future.”

CUAC’s submission also produces a statement of the bleeding obvious that, however, needs to be constantly shouted from the rooftops: it should be the aim of reform policy, including regulatory reform, to achieve best practice outcomes that reflect the needs of the community – and not, I’d add, the ideological or populist views of politicians.

Given Julia Gillard’s demands the States sign off right now on the national energy customer framework (NECF) as part of her “I have a big stick” push towards riding higher in the opinion polls through milking public power price pain, it is noteworthy CUAC expresses concern that the government’s approach may result in less than ideal policy and regulatory outcomes.

CUAC asserts that there are “crucial protections” for consumers missing from the NECF.

However, I can’t say I am taken with its proposed solution – which I’d describe as a suggestion for rolling reviews to make changes on the run as problems emerge. Better by far to get the thing right the first time.

(In passing, although it has nothing to do with energy policy, the current super trawler fiasco is a classic example of kneejerk reaction by a government under pressure and also of the rising tide of mob rule through social media.

(Put simply, the federal environment minister has caved in to a campaign by fringe groups who have succeeded in unnerving some on the Labor backbench.

(The broader implication here is the warning signals this backflip are sending to all investors. As well, it is a strong indicator of the lack of firm leadership in the present government. A Prime Minister in command doesn’t let panic in the ranks created by tweeters change policy decisions.)

Another CUAC observation worth noting is the point that, while there is additional scope for demand-side activities in the electricity market, there are risks associated with greater consumer choice in a complex market with the current low levels of knowledge about energy among households and small business.

CUAC picks up something on which I have been meaning to write for a while: excessive information on a confusing topic provided to time-poor households is not going to deliver a desirable outcome.

A conversation with your neighbours will quickly identify a core problem: most people feel powerless (sorry) about the rising cost of electricity and confused about what we they can do even though there are a number of options available to take the edge off their pain.

In this context, the continuing vacillation by State governments over smart metering and time-of-use charges has its basis in fear of a backlash from a poorly-informed community.

In turn, this flows from the fashion in which the vanguard Victorian program was planned and presented by the Labor administration – resulting in the present Coalition State government playing catch-up in the teeth of consumer resentment and other State governments unwilling to come in to contact with this tar baby.

While they vacillate, even in the present depressed power consumption market, the long-term prognosis for peak demand is that it will keep rising – and network charges with it.

(I had a conversation yesterday with a senior manager in energy technology services who takes leave to doubt the forecast in the Energy Supply Association’s yearbook that east coast peaks will require 50,000 MW capacity by 2020 – up from just under 40,000 MW today.

(Maybe not, but a rise to even 45,000 MW by the end of the decade is still movement in the wrong direction and the present state of the smart meter situation means that it is highly unlikely technology and price signals will be in place any time soon.)

CUAC also wants an independent inquiry in to the effectiveness of the regulatory regime for networks, building on the recent work of the Australian Energy Market Commission and the Productivity Commission.

While it is tempting to say that we are drowning in energy-related inquiries and reviews and surely don’t need more, it is also a fact that there is a strong element in the present processes of the regulatory watchdogs examining their own navels.

“Who will guard the guards?” is a question that goes back to Ancient Rome.

Meanwhile, the consumers groups are aware that they need a stronger voice at the national level and CUAC wants the Senate committee to focus on this – but it seems to me that the simple point here is that the ball is at their own feet.

The issue, no doubt, is that they need/want the federal government to subsidise national efforts.

All in all, the CUAC paper is a useful starting point for the select committee senators and a warning to them, if they needed it, that they are carrying a can of worms for the government – something the Coalition senators won’t find hard to bear – because the inquiry itself is another example of a political leader under pressure grabbing at straws.