In a one newspaper town, the Courier Mail will never miss an opportunity to slam the Palaszczuk Labor government, even if they have to distort or mislead, while generally neglecting good news.
So we’ve had another front page headline:
Most of the CM article comes from a good news media release from the Queensland Government, plus the information that the Queensland publicly-owned electricity assets returned $333 million more than Treasury had originally forecast.
Here is the media release in full:
Almost $1.5 billion in dividends from Queensland’s publicly-owned electricity assets have been reinvested in driving down power bills.
Energy Minister Dr Anthony Lynham said annual reports tabled showed dividends in 2018-19 had subsidised regional power bills, provided two annual $50 discounts for Queensland households and provided discounted electricity for regional customers.
“Because the Palaszczuk Government stopped the LNP from selling our electricity assets, dividends can be directed to households where they’re needed most,” Dr Lynham said.
“This investment of dividends is part of the Palaszczuk Government’s Affordable Energy Plan to put downward pressure on electricity prices for all Queenslanders.”
Dr Lynham tabled the annual reports of the government’s five energy government-owned corporations: Energy Queensland Ltd, parent company of Energex and Ergon; Powerlink, CS Energy, Stanwell and CleanCo.
“In 2018-19, energy dividends enabled the Palaszczuk Government to deliver $465 million in subsidies to ensure families in regional communities across Queensland paid a similar amount for their power to those in the south-east of the state.
“For the most vulnerable electricity customers in our community, $267 million in dividends was reinvested for affordability programs and initiatives under the Affordable Energy Plan.
“And in 2018-19, $100 million in dividends was paid straight back into Queenslander’s pockets with $50 wiped off 1.9 million household power bills.”
Dr Lynham said funds had also been reinvested across the electricity supply chain, from generation, transmission and distribution to, improve, maintain and deliver reliable power.
“More than $226.3 million was invested into capital projects at Stanwell and CS Energy to keep generation assets running safely, reliably and efficiently,” he said.
“Another $210 million was invested in our poles and wires across Queensland with Powerlink and Energy Queensland.”
For the 2018-19 financial year, the publicly-owned assets employed 9160 Queenslanders across the state and trained 547 trainees and apprentices.
“Queensland’s power assets are owned and run by Queenslanders” Dr Lynham said.
“Because we own our power assets, Queenslanders are paying the lowest average electricity prices of any mainland state in the National Electricity Market.
“The Palaszczuk Government will continue to use public ownership of energy assets to back Queenslanders and put downward pressure on energy bills”
In 2018-19, Under the Affordable Energy Plan, the Queensland Government delivered:
- $17 million in grants and interest-free loans to install rooftop solar panels and batteries.
- $1.6 million for Queenslanders who took up EasyPay Reward, with residential customers receiving $75 credit each year and business customers receive $120 credit each year until 2020.
- $2.5 million – of the total $4 million Energy Savvy Families Program – to help low-income families better manage their power bills.
- $143, 000 in Solar for Rentals trial providing 42 rebates to help renters and landlords enjoy the benefits of solar.
- $700,000 to deliver the Business Energy Savers Program to benefit agricultural customers and large businesses.
“The LNP still have not revealed how they will find $7 billion in commitments it has already made.
“Will they cut the subsidies our electricity companies provide, sack the people who work there or sell the income-generating asset altogether?”
End of media release.
The Courier Mail is either ignorant or wilfully ignores certain facts about electricity consumer prices in Queensland.
The first is that regional prices are regulated, and set each mid-year by the Queensland Electricity Authority. These prices then become the basis of the standard offer in SEQ. Regional consumers benefit from a $465 million subsidy. They don’t retailers touting for business, the bills are sent out and collected by Ergon, the network distributor. Many, if they hhad to pay the full cost of electricity, would not be able to afford to live where they live.
This year the news was good:
- Electricity prices for most regional customers will fall in 2019–20. The typical customer on the main residential tariff (tariff 11) will see a decrease of 4.4%, and the typical customer on the main small business tariff (tariff 20) will see a decrease of 5.8%.
Second, voters have made it clear that they want public assets like those in the electricity sector to remain in public hands so that we can finance important infrastructure and services, like education, health, police etc. In other states such profits go mainly to international companies. The CM editorial terms them a “cash grab”, showing their ideological orientation and pig ignorance.
When I looked into prices two years ago, for example in Electricity bills – Queensland acts because it can, I found that the Newman government was taking $5 billion per annum from the system. This was decreased to $3 billion under the first Palaszczuk government. My understanding is that this has been reduced by a further billion.
I stand to be corrected on these figures, which come from secondary sources.
Third, in recent years when interstate comparisons are made Queensland prices and bills are always competitive, usually the lowest. Lynham’s claim that Queenslanders are paying the lowest average electricity prices of any mainland state in the National Electricity Market accords with what I have seen in the last few years. Most recently this comparison of wholesale prices was given in an AFR article Outages drive brown coal power to new low:
That article also tells a tale of how generation source has changed in the past year:
Hydro output has been lower because of the weather, but coal plants have been unreliable in NSW and Victoria, with increased solar, wind and gas making up the difference.
Queensland has been almost all the time a net exporter of energy, and much of the new network solar now comes from there. This day in August has been fairly typical of what happens (from the NEMWatch site):
A total of 1995 kWh of large solar was being generated, 946 of it from Qld. During the day SA is often an exporter, but at times at night it is around 95% gas, and is effectively being propped up by imports of hydro from Tasmania, via Victoria.
Here is the graph of power bills from the Qld Competition Authority’s 2019-20 Regulated electricity prices for regional Queensland:
In a conversation with electricity expert Hugh Grant last year, he told me that the network charges (transmission and distribution) are actually greater than shown on the bill. His report published last year The Winners and Losers of the Monopoly Game: How the Queensland Government profits from Queensland’s excessive electricity prices includes this graph:
- Queensland’s electricity prices doubled from 2007/08 to 2013/14
- The price rises over the past decade have been predominantly driven by increases in network charges, which increased six-fold from 2004/05 to 2014/15, accounting for over 95% of the total electricity price increases during the period
- As a result, network charges now account for over half of Queensland’s electricity prices, whereas in 2004/05 they accounted for around 20%
- By contrast, generation and retail costs remained relatively stable over the period
It is fascinating that power generation is comparable to what retailers charge, who I regard as leeches on the system. On the face of it Peter Beattie’s introduction of full retail competition into the domestic electricity market in 2006 (in SEQ only) does not seem to have been a big success.
Whether the increased cost of networks was caused by gold-plaiting or not is another matter. Such is often claimed, but Queensland has the most decentralised population, unfavourable topography and weather, plus vegetation growth simply beyond the experience and imagination of most folk south of the Tweed.
However, I don’t have the time or the expertise to properly critique the whole area of electricity costs, prices and charges. The QCA document is 157 pages. Meanwhile my advice is, be suspicious of simple gereralisations. Choose your experts wisely – Hugh Grant is one of the most knowledgeable you’ll find.
What is clear from the graph that consumer bills increased during the Campbell Newman years of 2012 to 2015, and have been constrained since. Labor before last election claimed electricity prices had risen by 43% under the Newman/Nicholls government. Before the last election the LNP were are getting a free ride in the media with statements like ‘Prices increased 70% under Labor’ by cherry-picking spot prices. (See also Cherry picking electricity prices in Qld election).
If we want to argue whether network charges are presently too high we need to understand that in the NEM are they presently determined by asset valuations and rates of return set by the the Australian Energy Regulator, which is set up under the COAG Energy Council. That body is essentially a meeting of states, which have constitutional responsibility for electricity. As such the Commonwealth is a member of the Council with equal standing, albeit given the role of chair.
The notion the Commonwealth energy minister Angus Taylor is “minister for electricity prices” is wrong and misleading.
As a citizen looking for context I find economist Ian McAuley’s June 2017 article This time, let’s get electricity pricing right more than interesting. It includes this astonishing graph of consumer electricity prices:
Up until 1996 electricity was provided by state electricity authorities. At that time they decided to co-operate and the whole notion of privatisation and competition started to grip. It took until 2006 for the National Energy Market (NEM) to be launched, but NEM was not fully operational until 2009 when the Australian Energy Market Operator (AEMO) was established to manage the National Electricity Market (NEM) and gas markets.
Time, I think, for a root and branch reform in view of new technology and the transition to decentralised renewable power.
But I digress.
The Courier Mail can only manage cheap partisan shots in favour of one political party. No good news allowed, for example:
- Two huge renewable hydrogen projects have been planned for the heart of Queensland’s major coal and gas regions, with the Australian Renewable Energy Agency agreeing to initiate funding to support feasibility studies to use large-scale renewables for the production of ammonia.
One proposal is to build a solar farm of up to 210MW along with a 160MW hydrogen electrolyser to produce renewable hydrogen and “green ammonia” at Dyno Nobel’s existing facilities at Moranbah in central Queensland, which currently rely on gas.
The second proposal is to tap into wind and solar and storage facilities to be built by Neoen to use renewable hydrogen to supply one fifth of the ammonia needs from Queensland Nitrates ammonia plant near Moura, which also currently relies only on gas.
The two Queensland projects add to a growing list of renewable hydrogen proposals across the country, not just for the purposes of storing wind and solar for electricity, but also to help reduce emissions in key manufacturing industries such as ammonia production, and for the export of renewable fuels.
Update: I’m aware that the Australian Energy Market Commission (AEMC) has just produced a report on the future of the grid (see Powering our future and Delivering the grid of the future) and there is a review being conducted by the Energy Security Board into a
Post 2025 Market Design for the National Electricity Market (NEM). It requires a lot of effort to get on top of what is happening, and I don’t presently have time to tackle it.
There has been some coverage at RenewEconomy, and in the AFR. There seems to be a stoush between Audrey Zibelman of the AEMO and John Price of the AEMC. Here’s a taste from an article by Angela Macdonald-Smith Battle lines form in debate on future power system:
- Electricity policymakers, enforcers and producers are forming battle lines in what is set to be a contentious debate over the future design of the National Electricity Market.
Some are urging an overhaul to ensure investment in generators that will fill in the gaps between wind and solar power.
Sources point to strongly diverging opinions over whether the NEM can be made “fit for purpose” with some tweaks to its design, or whether a more centrally controlled system that prioritises security of supply is needed, despite the possibility it may cost more.
Debate has been sparked by a review led by federal policymaking body, the Energy Security Board, into what kind of NEM is needed after 2025 given the rapid transition towards renewable energy, which points to a possible accelerated exit from coal power generation.
Firmly on the side of a more centrally controlled system that prioritises reliability is the Australian Energy Market Operator, whose chief executive Audrey Zibelman early this month spelled out the need for separate markets for reserve capacity, grid stabilisation services and to provide value for “firm” generation sources. The market operator would then be able to call on those to ensure security of supply.
But the Australian Energy Market Commission, the rule-making body for the industry, is known to favour a more price-led system, based more closely on the spot market-based NEM, where the ability for spot prices to surge as high as $14,000 a megawatt-hour should provide incentives for developers to build new, fast-response gas and hydro plants.
The conflicting views have come to light through instances such as the AEMC’s rejection in February of an AEMO campaign for a “strategic reserve” to deal with power supply shortfalls.
I’ll try to do a post when I get time.
Update 2 (7 Oct 2019):
AEMO also has Transitioning to a lower emissions power system as an item on its forward work program.
A Canberra Times article Bob Brown’s convoy hurt Labor, says Richard Di Natale makes reference to “a politically charged inquiry into transitioning jobs from coal to renewables” which I hadn’t heard about.
So far I’ve found this from Lock the Gate:
Communities in coal mining regions have called for support from the NSW Government to diversify their economies, following the establishment of a parliamentary inquiry into the sustainability of the state’s energy industry and how communities can be better prepared for change.
The inquiry, established today by the Environment and Planning Committee in the NSW Legislative Assembly and chaired by Independent member for Sydney Alex Greenwich, will look into trends and forecasts for energy supply and exports in NSW and opportunities for sustainable economic development in regional communities likely to be affected by changing energy and resource markets.