Archive for July, 2017

Risky business

The Australian Competition & Consumer Commission chairman, Rod Sims, opening a regulators’ conference in Brisbane this week, spoke at length (unsurprisingly) about electricity issues and, in particular, about affordability. (His talk is on the ACCC website and well worth reading.) What I find interesting, and somewhat surprising, is that not one of the 1,013 words he used on the electricity aspect was “risk.”

One of the (many) problems with public debating of this issue is the lack of appreciation of the risks involved along the supply chain. This doesn’t apply to Sims, who understands energy risks as well as anyone in the country. What attracts my attention is that he didn’t choose to canvass the point even in passing this week.  It will be interesting to see how he and his ACCC team tackle this issue when they deliver their preliminary report on power bills to federal Treasurer Scott Morrison late in September.

Meanwhile, the 339-page Australian Energy Market Commission report on retail energy competition published this week contains quite a lot on the topic (and certainly much more than I can canvass in a blog post).

One of the aspects lost on the media (and quite a few others) in lashing out at energy retailers is the danger of crippling costs the sellers run as they juggle their way through the east coast market.

As an example, here is an excerpt from the AEMC report: “Energy retailers face a range of financial risks. The scale of this risk means that a retailer, if improperly hedged, could become insolvent within hours.”

It explains: “Spot prices can rise from average levels around $60 to $100 per megawatt hour in one trading interval to the market price cap of $14,200 per MWh in the next interval. If a customer withdraws energy when the price is high, the retailer must pay for the energy at the prevailing spot price.

“A retailer supplying a customer load of 1,000 megawatts at the market price cap could incur costs of up to $14 million in a single hour. At the same time, the retailer might only receive $250,000 (25 c/KWh × 1000 MW × 1 hour) from its customers under their retail supply contracts. The retailer must bear the difference of $13.75 million, whilst continuing to be able to pay network businesses the relevant network charges.”

AEMC adds: “To manage, retailers require large proportions of financial capital, as well as potentially some physical capital. As such, a retailer needs to make a margin commensurate with the costs associated with the provision of this financial and physical capital.

“Some commentators have suggested that the net margins of energy retailers can be compared with (those) of other retail businesses such as supermarkets. Energy retailing is fundamentally different to food retailing; energy retailing relates to the selling of financial products whereas food retailing relates to the sale of physical products. The gross and net margins of energy retailers reflect compensation for incurring risks that are fundamentally different from the risks associated with food retailing.

“Energy retailers’ risks are more similar to those of banks or financial institutions. Therefore, to the extent that comparisons are to be made, energy retailers’ margins are better compared against those of banks or financial institutions.”

As the report illustrates, there are a multitude of issues with which the retailers have to contend on a continuous basis. For example, “the (wholesale electricity) market price in each (bidding) period is set by the price bid by the marginal generator (and) there is no guarantee that this price will fully recover all the costs associated with generation, including the return on and of capital required by each generator, in each and every period.

“The entry of wind and solar generators into the market, with their low short-run marginal costs, can reduce prices in the wholesale electricity market when there is excess supply of generation capacity. During this time, market prices might be less than that needed to fully recover all the costs of those generators that have higher short-run marginal costs than wind and solar.”

And so on. All this is lost to view in tabloid media screeching (whether in newspapers or on radio or TV) about “gouging” and other sins.

In a time of soaring power prices, it is entirely understandable that sellers of electricity should be asked to account for the make-up of the bills they despatch – and I think their explanations fall short of the “pub test” of comprehension quite a lot of the time – but to assume they are guilty of rorting etcetera without knowledge of the market issues they have to manage is another example of community energy illiteracy, which is fuelled by what politicians (and others on the make) have to say in the media.

All this is tossed together with the separate, but related, issue of energy poverty, which was a problem a decade ago when bills were half the level they are today. It does not diminish the pain those in financial difficulty are suffering to point out that they are a tiny minority of the mass market but this does not suit the rant du jour, so the travail of the few becomes a symbol of all that is perceived to be wrong with the system.

The larger issue (in terms of how energy prices bite politicians) is the big number of so-called middle class Australians struggling to deal with rents or mortgages and the other routine costs of family life. In their world, where the need to cut money corners intrudes increasingly on living the good life, yet another power bill rise (let alone the one they incurred recently from seeking to be comfortable in a torrid summer) is quite a large psychological irritant (even if the actual latest increase is only the equivalent of a cup of café coffee a week).

Another issue for this substantial cohort of the community is participation in the retail market and the problems encountered in wrestling with the process. As the AEMC points out, “in NEM jurisdictions where consumers have an active choice of retailer, 47 per cent of residential and 54 per cent of small business (customers) have not switched retailer or plan in the past five years.”  It would be fascinating to have someone calculate what this represents in aggregate savings foregone – billions of dollars is my guess.

Sims, I note from his talk, wants to focus on the level of the standing or default prices these consumers choose to pay (‘which for a range of reasons are not being competed away”). Retailer risk surely is one ingredient.

That the present situation dissatisfies the mass market, and that Australians want action to ameliorate both the actual prices we are now paying and the upward trend we fear will continue, is beyond argument. But we will not get real solutions – that is, ones that work for us over time in delivering affordable, reliable power while continuing to reduce carbon emissions – out of an environment where policymakers are in a funk brought on to an extent by confected outrage over prices and their own lack of adequate appreciation of a complex marketplace.

Getting a real public handle on the nature of risk in the NEM would be a good thing.

Two-speed market

Timely is the word for the newest energy report, published today – the Australian Energy Market Commission’s annual review of the state of retail competition across the east coast.

And AEMC chairman John Pierce sums up the market problem in one more (hybrid) word: two-speed.

“We are seeing a two-speed market,” he says. “While competition is driving innovation and new choices for consumers in the retail market, these benefits are under threat by a wholesale market with rising costs. It’s critical that future policy on emissions reduction facilitates commercial investment in generation in the right place at the right time and supports a liquid forward contracts market so retailers can effectively manage their risk and keep prices as low as possible for consumers.”

The review finds that, while NEM retail competition is stronger and delivering benefits for consumers, higher wholesale costs are driving up retail prices. “This,” says Pierce, “is putting these benefits at risk.”

Rising wholesale energy market costs are being driven by a range of factors, the report comments, including the increasing costs of hedging contracts.

“Fewer generators can provide hedging contracts due to the lack of an emissions reduction policy that is properly integrated with the energy market, while generator retirements are reducing the supply of contracts. This, along with higher gas prices, is increasing the costs of doing business for electricity retailers, especially smaller retailers with innovative offerings. The risk of these electricity retailers leaving the market is growing.”

I don’t think anyone can accuse me of being naïve about our politics – I can point to a 40-year career of close working contact with politicians, federal and State – but, the situation being as the AEMC describes it, I find it amazing that our leaders, Malcolm Turnbull and Bill Shorten, can talk this week about getting together to discuss four-year terms for federal MPs while continuing to play wedge politics with something that literally affects the lives (and livelihoods) of every Australian.

A “summit” meeting of the leaders to resolve a mess that has been a decade in the making at the hands of both sides is beyond their wit and wisdom – is that what we are to take from the current situation?

Political writers of all stripes are telling us that the state of energy prices is now so troublesome for the community that the future of the current Coalition government may hang on it at the next poll.

The reason why is clearly set out in the AEMC report: “There is currently increasing upward pressure on retail energy prices. This is largely driven by factors outside the retail energy sector.

“In recent years, retail pricing outcomes have become increasingly dependent on outcomes in the wholesale energy market. The AEMC’s price trends reports show that nationally for electricity, the wholesale component’s share of residential prices increased from an estimated 19.6 per cent in 2014-15 to an estimated 28.6 per cent in 2016-17.

“The increases in electricity wholesale costs have been due to a combination of (a) generator retirement, combined with increases in gas prices and (b) the distortionary impact of having an emissions reduction policy mechanism not properly integrated with energy policy, in the form of the large scale renewable energy target.”

The reports adds this: “Since the announcement of the retirement of Hazelwood there have been large increases in forward contract prices for electricity across the NEM. This has been due to the expectation that electricity supplied by Hazelwood is replaced by more expensive black coal and mid-merit gas generation in New South Wales and Queensland. The cost of gas-fired power generation has recently been affected by higher gas prices and concerns about the availability of future gas supply.”

And, critically, this: “The RET has resulted in an increasing penetration of renewable energy generation in the wholesale market. Due to (its design), the new generators do not have the same incentives to enter into firm capacity hedge contracts as a means for financing their investment. They can instead finance investment through the separate source of revenue derived from generating certificates.

“The result is that the new generation adds to the physical capacity in the system, but, due to the design of the RET scheme, results in no corresponding increase in the supply of firm capacity hedge contracts.

“Further, the new generation incentivized by the RET contributes to the retirement of the older generation plants that were supplying the firm-capacity hedge contracts.

“Consequently, the supply of firm capacity contracts is diminished, increasing the cost of contracts, which affects retail competition.”

One of the tedious memes of past years in this debate was “death spiral,” applied to networks and fortunately now kicked in to the sidelines, but it is clear from what the AEMC is saying that the market is caught in a “pain spiral” that can’t be quickly or easily resolved but must be fixed in the interests of householders, small businesses and all forms of trade-exposed industrial activity.

The commission tells the body politic: “Any emission reduction policy that is introduced must consider the enduring effects it may have on the energy market. In particular, how it affects not only the level of investment in physical capacity, but also how that investment in generation is financed.

“Emission reduction policy mechanisms that incentivise investment in electricity generation capacity without incentivising the ongoing supply of hedge contracts risk adversely distorting wholesale and retail market outcomes. They will inadvertently lessen the emerging competition from innovative new retail energy businesses and place upward pressure on consumer prices.

“Conversely, where an emissions reduction policy is effectively integrated and aligned with the design of the NEM, it is likely to lead to a higher degree of investment certainty in the energy market and more availability of contracts. This will reduce pressure on the wholesale electricity market and result in lower retail prices for consumers.”

The report also contains this warning for those who may be taken in by the ululating from green boosters on the cure-all offered by lots more renewable power: “In the short term, the entry of low-marginal cost renewable generators incentivized by the RET can lead to a decrease in the wholesale electricity price. However, this decrease is only likely to be transitory. Lower spot prices can lead to, and have led to, the exit of thermal generators that cannot fully recover their generation costs with low wholesale prices. Once this occurs, wholesale spot prices will increase again.”

These aspects of a 339-page report encapsulate the major challenge for the Coalition and Labor at a national level – there is another, and it is highly important, resolution of our domestic gas imbroglio, but achieving this (which is unlikely in the short term) will not deliver pain relief without the issue the AEMC has set out so clearly being properly addressed.

Is pursuing the national interest as soon as possible by fixing the “two-speed” NEM really beyond our political leaders? And, to be clear, “asap” here means “now” — not by setting up more task forces and inquiries.

The other shoe

Important as the Finkel task force report is for the management of energy supply – its political implications for Malcolm Turnbull personally and for the Coalition government over the vexed target issue are growing by the day – there is a document to come that may well land with a bigger bang.

The second shoe to fall in 2017’s wild debate on energy will be a report by the Australian Competition & Consumer Commission in to NEM retail electricity supply and end-user prices, with the media just starting to focus on the submissions it is receiving.

The commission, whose chairman, Rod Sims, says Australia has “major problems” with energy affordability, must provide a preliminary report by 27 September and a final one by 30 June next year.

What the ACCC is setting out to do is clear from its issues paper, published in May: “The inquiry will look at the drivers of retail electricity prices over time, including factors at all levels of the supply chain that may affect price, and whether there are options to address price impacts on customers. The inquiry will consider what can be done to improve the experience of customers in acquiring electricity services. The inquiry will also examine the industry structure, the nature of competition, the representation of prices to customers and any other factors influencing the price of retail electricity services.”

From a political and media perspective, the biggest bang will come from the commission’s consideration (as required by Treasurer Scott Morrison) of two things (1) “the profitability of electricity retailers through time, and the extent to which profits are, or are expected to be, commensurate with risk”, and (2) “all relevant wholesale market price, cost and conduct issues.” The latter goes in part to generator behaviour, a topic on which some stakeholders have strong views.

Overall, this is seriously important stuff for the players in energy supply, the more so as the final report is scheduled to emerge at a time when a federal election is imminent (bearing in mind that it must be held between August next year and May 2019).

The issues for residential users are much publicized in the media, but mostly in forms that deliver more heat than light; it is well worth reading the 12-page submission to the ACCC inquiry from Janine Young, the New South Wales energy and water ombudsman, for a serious dissection of not just the pain some low-income consumers are feeling but also the confusion that engulfs people plunging in to attempts to find the best deals, evidenced by the fact that three out of 10 NSW accountholders are still stuck on the “standing contracts” that are costing them much more than they need to pay. This is something of the order of a million households, not a small number in political terms.

The concerns of large industrial users, on display in the business sections of the main newspapers on an almost daily basis, are illustrated by the plea of Major Energy Users Inc for the ACCC to not merely dissect the causes of higher prices (“causing the progressive destruction of the competitiveness of many parts of manufacturing”) but to come up with solutions that will drive them down.

It will also be interesting to see how far Sims and his people focus on the impact of energy prices on the agricultural sector, which has sent in a strong submission. National Irrigators Council CEO Steve Whan says the price crisis is jeopardizing Australia’s ability to provide affordable food and fibre. Most consumers do not realize that much of what they eat comes from irrigated agriculture and irrigators have seen their costs “explode,” he adds.

So far as the mass market is concerned, the supply industry promotes the view that a high level of retail competition in the NEM is leading to continuous improvement in customer service with rising innovation in products and services and will deliver “downward pressure” on prices – which is code for “they won’t be as high in the future as they would be under business as usual.”

However, the industry argument that, in the coming decade, increased innovation will give customers greater choice and control over service, product and price runs head-on in to the pressure on politicians (and governments in office) to perform a here-and-now, Houdini-like escape on behalf of small consumers from today’s situation. Collectively, the mass market (aka voters) is growling at the body politic “don’t just stand there, do something!”

That this is a high-risk environment for both energy investors and, in the longer term, consumers (when the quick fixes turn pear-shaped, as they always do) should go without saying but it won’t stop MPs’ knees jerking.

No doubt the ACCC will focus on the fact that the issues affecting prices vary from State to State (as witness the rather shrill current public row over government-owned generators in Queensland).

The five privately-owned electricity distributors in Victoria, for example, are pointing out in a joint submission to the ACCC that their charges, in inflation-adjusted terms, have actually fallen 14.3 per cent since 1995 and now account for an average 25.4 per cent of the household bills.

(The rest of the breakdown, they say, is 4.3 per cent for transmission, 23.6 per cent for wholesale electricity costs, 12.1 per cent for “policy initiatives” – such as the RET and solar PV feed-in tariffs — and 25.5 per cent for the retail component.

(Now, hold on, that adds up to 90.9 per cent. What’s missing?

(The answer, of course, is the GST…..which takes about $140 a year on average or, I estimate, about $324 million a year from Victorian residential power users. Extend this across the country and the stealthy hand of government in the household wallet adds up to some $1.4 billion for power alone.

(In this environment, should there be a GST on electricity? Now there’s a thought.)

The network five also claim that, since the Victorian industry was disaggregated and privatized, the cost of policy measures (which include the compulsory roll-out of smart meters in this State) has accounted for 51.6 per of the rise in average annual household power bills.

On the topic of networks, every time I see a media report about “gold-plating” or “gouging” by the “poles and wires” people, I feel the urge to tweet a response that a large part of the capital outlays permitted by the regulator for 2007-2012, flowing through as substantial price rises for consumers, addressed the need to replace infrastructure built in the 1960s and 1970s with a working life of 30 to 40 years. (Try getting this in to 140 characters!) Replication across the east coast of the experiences in south-east Queensland in the previous decade (a big spur for the move to spend billions on remedial works throughout the NEM) would have created wholesale political panic by long before now. This dam burst because politicians had sat on outlays for years under the old non-market system to keep down charges and were now faced with nasty consequences.

Of course, the need to address ageing infrastructure is not the whole story of today’s network prices – but simply ignoring this aspect is bizarre.

How far the ACCC can go in disentangling the whole cat’s cradle of causes for power bills being where they are today – and communicating this in terms ordinary Australians can understand – remains to be seen. It needs to do so if the remedies politicians end up adopting from its report (and from Finkel’s) are not to turn eventually in to just more nasty (and therefore publicly unpalatable) medicine over time.

Sailing stormy waters

Perhaps the most depressing thing said about energy this month is the observation by Ross Garnaut that “it may take several more electoral cycles” before our political system can achieve a consensus on policy.

It’s especially depressing because he is probably right and the shenanigans between governments in the run-up to the latest CoAG Energy Council meeting and since it underscore the problem.

Still, there is some light: the council endorsed 49 of the Finkel report’s 50 recommendations, of which possibly the most important is the formation of a national Energy Security Board.

The Australian Energy Market Operator’s chairman reportedly sees the Brisbane meeting as “the one where the energy ship turned around.” One can only hope he’s right but one needs to bear in mind that this is a ship that has turned before – and more than once.

The ESB, says the meeting communiqué, “will provide whole-of-system oversight for energy security and reliability of the NEM and be integral to improving long-term planning.” It will report to the Energy Council on a regular basis, including an annual “Health of the NEM” review in addition to advising ministers on strategic priorities. Josh Frydenberg says its role will be “critical.”

The chances of this level of endorsement of Finkel proposals did not appear all that bright on the eve of the Energy Council meeting, based on ministerial posturing in the media, but maybe the “stakeholder roundtable” they held on Thursday night with 100 representatives from consumer groups, industry bodies and concerned companies sobered the animal spirits of the politicians.

The Australian Energy Council, representing generators and retailers, took a message to the meeting that “energy prices are unsustainable and the reliability of the electricity system is deteriorating.” It would not have been alone in presenting these sentiments. AEC chief executive Matthew Warren asserts that “the time for playing politics is over (because) Australia has arrived at a tipping point for energy policy.” Regrettably, echoing Garnaut, there is no realistic chance that politicians will stop playing games – which is why the ESB concept is so important; it will be tricky (in terms of public reaction) to maintain the games if an independent umpire is delivering hard truths.

In the short term, the hardest gig in the energy arena right now falls to the Australian Energy Market Operator, which, the communiqué notes, “has put in place a comprehensive set of actions to ensure the (east coast electricity) system is ready for the coming summer” and has also contracted an independent audit of its plans to manage the NEM through the heatwave season. Frydenberg, in a newspaper op-ed, underlines the demands being made on AEMO: “Interacting closely with generators to ensure their maintenance timetables and resource stocks are appropriate for summer is (its) priority.”

A repeat of last summer’s weather is a challenge for east coast supply shorn of Hazelwood, not least in Victoria and New South Wales, home to 60 per cent of NEM power demand in 2016 and to 6.2 million residential and business electricity accountholders. A debacle here of the South Australian kind next summer is not to be countenanced economically, socially or politically and, as the communiqué makes obvious, the market operator will be front and centre in any blame game that ensues if there is an unfortunate event.

A core part of the broader challenge for the NEM is the gas imbroglio and, really, nothing has changed after Friday’s ministerial meeting.

Frydenberg sums things up like this: “COAG has been remarkably effective in agreeing to a historic set of reforms around gas pipelines and the Australian Competition and Consumer Commission is doing important work lifting the veil on gas pricing and margins in the wholesale market, but Victoria and the Northern Territory continue to lock up their abundant gas resources and prevent them from being developed.

“It’s a bit ironic,” he adds, “for Victoria to grandstand on the Clean Energy Target while ignoring a key recommendation from Finkel’s review that States drop their mindless bans on onshore gas development, accept the science and move to a case-by-case regulatory regime.”

In short, we are still mired in the potholes on a path that should be leading to the expenditure of billions of dollars to ensure adequate east coast supplies of gas out to 2030. We still have many business consumers, large, medium and small, under the price pump and high gas prices will continue to flow through to NEM wholesale electricity prices and ultimately consumer bills. The federal government’s intended intervention to force gas aimed for foreign buyers in to the east coast market is not going to bring down prices to any comfort zone for direct users of the fuel or power generators. It’s a palliative measure, not a cure.

Chemistry Australia CEO Samantha Read said this month that there is “a lack of understanding of how critical domestic gas is to job creation.” Her industry uses 10 per cent of national domestic gas supply and the present problems, with company input costs rising by hundreds of thousands, and in some cases millions, of dollars are a real danger to jobs and the economy.

This is another area where the electoral cycle is freewheeling over the real needs of the community and the economy with Victoria and NSW in particular being unable, mainly for political reasons, to introduce a satisfactory regulatory regime for gas extraction. The same is true in the Northern Territory, where gas resources are large enough to make a real difference for southern States.

Perhaps the biggest political issue looming ahead is the highly likely coincidence around this time in 2018 of more hurtful power bills arriving in millions of homes after another hot summer and the next round of retail price hikes (even if they are not at the eye-watering levels of 2017), feeding in to the run-up to the next federal election.

Paul Kelly of The Australian opined a week ago: “At stake is the (federal) government’s ability to prevent blackouts and counter spiralling price pressures on house­holds and business. If this fails, Turnbull is history at the election.” No pressure, then – and no prospect either of Labor desisting in striving to ride the opportunity to the polling booths.

Which brings us to the clean energy target, the most politically sensitive Finkel recommendation, and to the Labor NEM State governments (in Queensland, Victoria, South Australia and the ACT) banding together to request the Australian Energy Market Commission to model a design. Frydenberg labels this a stunt, which, of course, it is, but the Turnbull government has created this problem via its inability to pursue the Finkel recommendation in its own ranks.

The AEMC request is Labor’s ploy to ensure this is a political grenade that goes off later this year or in the first half of 2018. It’s a certainty that the bulk of submissions to an AEMC inquiry will promote adoption of the measure. It is also a certainty that Abbott and his acolytes will continue to rail against the measure.

Politically, it’s a gift that keeps on giving for Bill Shorten & Co with the full-throttle support of the media.

The energy ship may have turned but it is still in stormy waters and reefs lurk ahead.






New normal

What constitutes the “new normal” in Australian electricity supply makes for a good debate.

The phrase in its current usage derives from the argument that renewable energy is today the cheapest type of new power generation that can be built in Australia – which isn’t the same thing at all as cheap power and doesn’t address the issue of total system cost of supply.

The “new normal,” green power boosters argue, is a growing dominance of wind and solar energy in the generation development market.

Another perspective of our situation, I suggest, is that the “new normal” is a highly politicized energy arena where government intervention is not just growing but is being demanded from various quarters or is perceived by politicians as the only means of escape from a threatening (for them) situation.

The long-term implications of this for all electricity investment, and ultimately for users, are (or should be) troublesome.

Another version of the “new normal” is that both households and businesses, hard-pressed by their budget circumstances due to a range of factors (for example, the size of rental and mortgage payments in the residential sector), are pursuing lower demand (which for companies can include closing down).

How this pans out over a number of years, intermingled as these demand developments will be with the aforesaid political interventions, is simply beyond reckoning at this point.

There are dire warnings about the “hollowing out” of the national industry base that, if borne out, may have a profound impact on our society – or industrial users may come up with new approaches.

In this context, I was interested to see (in the latest issue of the excellent EnergyQuarterly publication produced by consultants EnergyQuest) a suggestion from Graeme Bethune that, rather than going west in the colloquial sense, big gas users may consider going West.

Bethune comments: “There is currently a massive difference between gas market conditions on the east and west coasts. The east coast has a tight market with double-digit prices. The west coast has a depressed domestic market with plentiful supply and prices half those in the east. The WA challenge is to bring big fields to market.”

Instead of building an expensive west/east gas pipeline, he suggests, “why not lure (eastern) industry to WA and then transport finished product overseas (from there) or to the eastern markets?” Western Australia, he adds, has good port, road and rail infrastructure already in place.

The implications for Victoria and New South Wales, if this should come to pass, are, to put it mildly, significant. What would the “new normal” then be for the economies and social life of these States?

One of the points here is that striking Australia-wide poses has its limitations. There are lots of differences between the States.

While all this is going on, the intervention that is the renewable energy target (in its iteration established by the Abbott government) gives the appearance of being met by its due date, 2020. Reporting by the Clean Energy Council (via its Clean Energy Australia 2016 publication) sets RET-certificated electricity output last calendar year at 17,500 gigawatt hours – and identifies $6.9 billion worth of current investment in 3,150 MW of new projects, roughly half what is still needed to achieve the 33,000 GWh target at the end of this decade. Green investors seem confident the rest of the necessary building program will be achieved.

Nationally in 2016, according to the CEC, renewable generation accounted for 17.3 per cent of supply – but more than 42 per cent of this was long-established hydro plant production. Wind power accounted for almost 31 per cent and small-scale solar PV for another 16 per cent.

In the three States that dominate demand and supply – Victoria, NSW and Queensland, with a combined power production last calendar year of 180,342 GWh, almost 89 per cent of the NEM total – all renewable generation, including hydro, amounted to 18,912 GWh.

(As an aside, there is an interesting breakdown in the CEC publication – on an Australia-wide basis – of the components of household power bills, data readers of the media don’t get to see.

(The breakdown shows a rise from an average household annual bill of $1,296 in 2015-16 to $1,353 in the current financial year and projects that this will grow again to $1,390 in 2017-18 and $1,422 in 2018-19. That’s a rise of 9.7 per cent over four years.

(Put another way, at present the average Australian residential account-holder is spending $3.70 a day on electricity supply, up from $3.55 last financial year, in round terms the price of a cup of coffee a day. Smokers with a 40-a-week habit spend about $5.25 a day. On the above projections, in 2018-19 the average household power expense will be $3.90 a day.

(The CEC chart also shows that the current components of the bill amount to $114 a year for various green schemes, $114 for transmission charges, $519 for distribution network charges and $606 for wholesale and retail costs.)

Moving on from this digression – and remembering old Pontius Pilate, who asked “what is truth?” as he wrestled with every political leader’s quandary: to do the right thing or the popular thing – this “new normal” meme comes with many angles and, like so much else thrown around in common discussion, bears careful analysis.

I see the recommendations from the Finkel task force now being pared down to four key outcomes – increased security of supply, future system reliability, rewards for consumers and lower carbon emissions – delivered through three key mechanisms: an orderly transition of the supply system from where it is today to one with lower abatement, enhanced system planning and stronger governance.

The view of a rush to wind, solar and batteries as the “new normal” seems to me to require a lot more thought under this template.

The week ahead sees the CoAG Energy Council wrestling with the Finkel report. The chances of a “new normal” emerging from the meeting in the form of bipartisan political agreement on the path forward are what? And this is before we contemplate whether the federal Coalition can even agree within its own ranks on next steps.