Government: Stop fiddling around the edges
Not enough dispatchable power. That’s what causing electricity price spikes and the prospect of blackouts this summer.
In case anyone did not accept this bleedingly obvious point, the Australian Energy Market Operator has recently pointed it out in a report to the Government.
And what has caused this insufficient dispatchable power is decades of government penalties, threats and bans against the only forms of affordable dispatchable power: power from fossil‑fuels and nuclear power.
The Renewable Energy Target must be abolished, a guarantee against future carbon pricing must be provided to prospective investors in new coal-fired power stations, and the ban against nuclear power must be lifted. And to provide relief in the immediate term, the GST on electricity, which is an essential service, must be removed.
It sounds simple, and it is as simple as that.
The urgency of this call to action cannot be exaggerated. Price spikes and blackouts are not just inconvenient, they are job‑destroying and life-threatening.
A similar story applies to natural gas. Gas prices have jumped despite our rich gas supplies, which are stuck in the ground due to evidence-free state bans, and the Commonwealth Government’s unwillingness to coerce these states to lift these bans.
Instead we see the Government fiddle at the edges. It calls electricity companies into a room to tell them to write letters to their customers. It calls gas companies into a room to tell them to divert gas to domestic markets even if this means reneging on gas export contracts. And it introduces bills like the bill before us today.
It’s the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017.
This bill removes the right to have reviewed the decisions by the Australian Energy Regulator regarding the price of energy transmission.
Prices for the service provided by electricity transmission lines and gas pipelines are decided by the Australian Energy Regulator and reviewable by the Australian Competition Tribunal.
The Government has identified no flaw in the method used by the Australian Competition Tribunal to review the price regulation decisions of the Australian Energy Regulator.
But because the Australian Competition Tribunal has, on occasion, ruled that the regulated transmission prices have been set too low, the Government has decided to wipe out the avenue for review by the Australian Competition Tribunal.
This preference for regulating transmission prices below what a review may consider appropriate may suppress electricity and gas prices in the immediate term, and this is surely the Government’s motivation in introducing this bill.
But it risks delivering unreasonably low returns to businesses that have invested in transmission capacity. This will wipe out incentives to invest in expanding transmission capacity, leading to reduced transmission capacity, less reliable supply and higher prices for years to come.
It’s robbing future energy users to provide some brief relief now.
The Government can and must do better than this. I oppose this bill and call on the Government to free up the future supply of electricity and gas instead.