Scott Morrison put in a fine effort to stop the votes that would have retained Wentworth for the Liberals. And he succeeded. Now he seems intent on stopping the $200 billion worth of investment that will be needed to transform the electricity sector.
- Known as the Constitutional Law of Agreed Prices, the law authorizes regulatory authorities to reach agreements with industry representatives on maximum sale prices for key staples.
That worked a treat, as you can see here, where the company halved the size of the detergent containers and jacked up the price anyway. Now store owners who close their stores rather than lose money are going to be thrown in the slammer.
Here in Oz:
- Prime Minister Scott Morrison repeatedly told Parliament, swinging his arms as if holding a baseball bat, that if electricity retailers failed to cut their prices he would hit them with a “big stick”.
Asked at the media conference what the “big stick” might be, Morrison replied:
- “It’s everything from enforceable undertakings through the courts through to divestment powers of their assets.”
His ultimate threat is, do as we say or we will break you up.
Barnaby Joyce has called for forced divestiture to be extended to all industries through a general amendment to the Competition and Consumer Act.
Emerson worries that such a law could get enough support in the Senate from the crossbench, and even The Greens, to pass, and then Labor in government may never be able to repeal it.
Even if contained to the electricity sector, the laws would create sovereign risk. Emerson points out:
- CSIRO and Energy Networks Australia have estimated Australia will need more than $200 billion in energy-sector investment by 2050. As a small, open economy, most of that investment will need to be funded from abroad. The “big stick” of forced divestiture would guarantee that funding never arrives.
Much of this investment will be needed in reshaping the grid, which, apart from Tasmania and Queensland has been privatised and is largely foreign-owned. Emerson is right to worry about sovereign risk. There is no compelling reason why international capital should risk long-term capital where policy has become so erratic and arbitrary, and where ministers fondle coal in parliament.
Meanwhile at the COAG Energy Council meeting last week:
- One of those initiatives is the setting of a lower “default” price, although many energy companies and private analysts warn that bringing the price down too low may actually kill competition rather than increase it, and ultimately force prices up for most consumers.
Further work on the default price will be prepared for the December meeting, although Victoria (which plans to introduce its own), Western Australia and the Northern Territory noted any such default price would not apply in their jurisdictions.
The ministers also agreed that the AEMC – the market rule-maker – should undertake work on the impacts of the Commonwealth’s proposed default tariff on competition issues and customer impacts. It has previously opposed such a price.
Meanwhile, the COAG ministers agreed to that the ESB should progress development of Retailer Reliability Obligation, and will return to Council with a final draft Bill for decision in December 2018.
The COAG communique also said ministers had asked the ESB to provide advice on a “long- term, fit-for-purpose market framework to support reliability that could apply from the mid 2020’s as the market transitions.” The ESB will report back to Council in December 2018 on a forward work program for endorsement.
It will be interesting to see how the ESB treat the scheduled closure of coal power post 2025, but no big sticks as such so far.
Meanwhile Angus Taylor, who said when he started as energy minister that we already had too much wind and solar, was skiting about the increase in renewable energy:
- “We are going to see a 250 per cent increase in wind and solar in the National Electricity Market in the next three years …. That is $15 billion in new renewables, wind and solar, and the result that is that we will see sharp reductions in emissions.
“That is why we will meet … the Paris climate targets … in a canter.”
That won’t help him with Paris commitments beyond the energy sector, however, a small point routinely ignored.
While that was going on, government officials told Senate Estimates that there was no doubt that the influx of wind and solar had brought down prices from where they would otherwise be, and would continue to do so.
Monday’s AFR also ran a story about Primo Smallgoods in Brisbane, the southern hemisphere’s largest ham and bacon producer, deciding to install the country’s largest rooftop solar array – a 3.2 megawatt installation covering about 25,000 square metres of rooftop at Primo’s plant in Wacol.
- The industrial market for rooftop solar is expected to triple next year as more businesses turn the roofs of their factories and warehouses into power plants.
- By 2050, solar systems installed “behind-the-meter” – generating power on-site that is not supplied from the centralised grid – are expected by Bloomberg New Energy Finance to make the consumer the most influential electricity generator in the country. Solar will by then meet by far the majority of demand during peak daylight hours, with batteries playing an increasing part after hours.
According to Audrey Zibelman, chief executive of AEMO, rooftop panels are being installed at a world-leading rate of six-and-a-half panels a minute. Here’s what happened in South Australia recently:
In Queensland the Queensland Competition Authority already monitors electricity prices, setting the price for regional users supplied by Ergon, which then becomes a default offering for SEQ. News has just come through that in SEQ prices have now fallen four quarters in a row. Would the ACCC and Mr Taylor explain how this could be when the poles and wires are a government-owned monopoly, two-thirds of generation is state-owned, and the state is going gangbusters installing renewable energy?
Energy Security Board chief Kerry Scott seems happy to work with states and says their renewable energy targets are lowering emissions.
ScoMo and Taylor warn that we run the risk of getting ahead of the rest of the world with climate change measures. Spain has just done a €250m transition deal with the EU to close most of its coal mines. Here the CMFEU:
is calling for a tripartite approach to coal plant closures with no forced job losses, in line with the successful exit from coal mining in Germany’s Ruhr region and in contrast to the disastrous, unplanned retrenchment of coal workers in the US Appalachian region.
In Australia states have responsibility for electricity provision. What brings the Commonwealth in is the international Paris Agreement. Since they have split emissions off in a separate ministry and boast that they will meet Paris commitments “in a canter” without raising a finger, they should just relax, do nothing, and release a media statement saying how pleased they are every time there is good news about prices. Signs are, as with the Wentworth by-election, every time they do something they make matters worse.
Just get out of the way, please.