Rulemaker warns current 'patchwork' of policies won't fix power prices

The energy market rule maker has slammed the government’s "patchwork" approach to policy, warning a focus on short term fixes was undermining the prospect of lasting solutions to high power prices.

PM Scott Morrison has hitched his wagon to "fair dinkum" power.

The Australian Energy Market Commission's submission to a senate inquiry into the federal government’s so-called Fair Dinkum Energy policy, released on Friday, offers a withering assessment of the state of play.

The government's policy proposals include a regulated basic electricity price for households and the power to break up companies found to be behaving poorly in the market.

It unveiled the policies after ditching the National Energy Guarantee, which enjoyed widespread support from many stakeholders, and in the wake of an Australian Competition and Consumer Commission’s electricity review which found the energy market was ‘broken’ and not operating in customers interest.

Read the story from The Age by Cole Latimer - “Rulemaker warns current 'patchwork' of policies won't fix power prices.”

Another big stick policy comes bit unstuck

Another of the federal government 'big stick' policies designed to force down power bills has run into trouble after the energy market rule maker rejected its proposal for a cap on default electricity prices.

The government's planned regulated power price has
been knocked back by the sector's rule maker.

This rejection came as Labor and Liberal state energy ministers plan to push for the development of policies to achieve a net zero emissions energy system by 2050 at a meeting of the Council of Australian Governments (COAG) Energy Council on Wednesday.

Read the story from The Age by Cole Latimer - “Another big stick policy comes bit unstuck.”

(And this from a market-driven coalition government - the big stick policy sounds remarkably like socialism - Robert McLean)

Reset climate policy to fix energy market

In releasing yet another report on electricity prices, ACCC chairman Rod Sims said that the energy market is ‘‘broken’’. What is needed is not a repair job on the whole electricity market but a clear decision on climate change policy.

The 35 per cent real increase in household electricity bills in the past decade is certainly a significant burden but the ACCC’s 398-page report, On restoring electricity affordability, part of a veritable reference library on the topic in the past few years, must not be allowed to muddy the water.

The electricity market basically works except Australia cannot establish how fast to cut its greenhouse gas emissions and make the transition from coal to renewables. Mr Sims’ vague language only encourages the usual suspects to claim that the solution to the problem is building more coal plants.

Read the Editorial from The Age - “Reset climate policy to fix energy market.”

New analysis shows that NEG is worse than doing nothing

New modelling by energy market analysts RepuTex has added to the deepening concern about the proposed National Energy Guarantee, suggesting it is calibrated to achieve an outcome that is worse than doing nothing.

The RepuTex analysis builds on concerns that the modelling used to underpin support for the NEG made a complete hash of estimating what would happen if no policy was in place.

It finds that the “do nothing” scenario still results in a 29 per cent cut in emissions by 2030 – more than the 19 per cent assumed by the Energy Security Board and more than the 26 per cent targeted under the NEG.

That means that the NEG would provide no incentive for any new investment in renewable energy.

Read the story by Giles Parkinson from RenewEconomy - “New analysis shows that NEG is worse than doing nothing.”

Baffled by baseload? Dumbfounded by dispatchables? Here’s a glossary of the energy debate

Australia’s energy market is a prominent fixture in our daily news cycle. Amid the endless ideology and politics swirling around the sector, technical terms such as “baseload power” and “dispatchable generation” are thrown around so often that there is a danger the meaning of these terms can get lost in the public debate.

High-voltage power lines stand near an electricity substation on the outskirts of Sydney.

The term “energy crisis” is bandied around quite loosely with some confusion around whether the crisis is about prices or security of supply. The politics of this are infernal and largely avoidable if all sides of politics had paid consistent and principled attention to energy policy over the 20 years since the formation of the National Energy Market.

It’s worth setting the record straight on the meaning of some of these terms and how they relate to climate policies, new technologies and the progression of market reform and regulation in Australia.

This glossary, which is by no means exhaustive, is a first step.

Read the piece on The Conversation - “Baffled by baseload? Dumbfounded by dispatchables? Here’s a glossary of the energy debate."

Chief Scientist's report paves way for end of climate plan war in Australia

The review of the Australian energy market presented on Friday to Prime Minister Malcolm Turnbull and the leaders of the states and territories is driven as much by politics as it is by policy. The report by Chief Scientist Alan Finkel might thus disappoint science and economics purists, but it has the potential to break an impasse that has for a decade shackled this nation's ability to respond effectively and efficiently to the existential threat of global warming caused by human activity, particularly through the burning of fossil fuels.

So, while much remains unclear because the government will need time to respond to the report and to seek cross-party support for any measures, Dr Finkel has provided a path out of a quagmire of vested interests and political opportunism.

The key to mitigating the risk is to put a price on carbon that reflects not only its energy generation benefits (which create private profits), but also the associated environmental costs (which lead to public losses). The most efficient and effective way to set such a price is via a market mechanism – a cap and trade system, for example. Then prime minister John Howard took such a policy to the 2007 election, as did the eventual victor, Kevin Rudd. But that bipartisanship unravelled in 2009 after then opposition leader Malcolm Turnbull lost a party room ballot by one vote to climate-sceptic coal champion Tony Abbott.

Read the Editorial in today’s  Melbourne Age - “Chief Scientist's report paves way for end of climate plan war in Australia.”

With gas and hydro plans, the government is looking at the whole picture

Australia, like many countries, is grappling with an energy market in transition. It’s a politically fraught topic, but two major policy developments create hope for a better approach.

Hydro electricity will be part of Australia’s energy future.

Prime Minister Malcolm Turnbull announced last week that he will restrict gas exports and reserve supplies for Australians. This comes on the heels of an ambitious plan to increase hydroelectricity capacity in Tasmania.

Following unproductive talks with gas producers to try to ensure a secure domestic supply, the government has said it will force companies to reserve gas for the local market if a shortage is forecast. This is designed to reduce domestic retail prices for gas and ensure energy security.

Just one week before that, Turnbull presented proposals to invest in pumped hydroelectricity in Tasmania, by redeveloping the old Tarraleah scheme, enhancing the Gordon Power Station and exploring several new schemes. This follows the announcement of a A$2 billion expansion of the Snowy Hydro scheme and a plan to build a pumped hydro plant at Spencer Gulf in South Australia.

Read the thoughts of a Lecturer in Sustainability from the University of Queensland, Cle-Anne Gabriel, on The Conversation - “With gas and hydro plans, the government is looking at the whole picture.”

The A$1.2 billion saving Australia’s electricity rule-maker just knocked back

The governing body for our energy market, the Australian Energy Market Commission, has just missed a major opportunity to modernise our electricity networks. Last week the commission rejected a proposal to pay credits to small, local generators (such as small wind, solar and gas). Our research shows that this could save electricity consumers A$1.2 billion by 2050.

In July 2015, the City of Sydney, Total Environment Centre and NSW Property Council proposed the Local Generation Network Credit rule change. This would have required network businesses to pay a credit for electricity exported into the distribution grid – that is, close to where it is actually consumed.

This is different to the credit (known as a “feed-in tariff”, or FIT) paid by electricity retailers for solar households that export power, which reflects the energy value of the solar rather than any network value. FITs are a fixed payment for the amount of power exported with no variation for the time of day. In most states, retailer FITs have replaced generous mandatory FITs set by state governments, and usually have an upper limit on system size somewhere between 5 and 100 kilowatts.

The network rule change would have been a small but crucial step towards recognising that in the future electricity will flow both to and from consumers, as more and more individuals, communities and businesses install their own generation.

Read the piece by the Research Director, Institute for Sustainable Futures at Sydney’s University of Technology, Jay Rutovitz, on The Conversation - “The A$1.2 billion saving Australia’s electricity rule-maker just knocked back.”

Consumers warned after complaints surge against solar companies

Many complaints about solar companies.

Profit often distorts and frequently destroys a legitimate market.

Climate change has been the midwife of the solar energy market, but as with most other commercial opportunities, potential easy and quick money has seen a number of less than honourable characters operating within the industry.

Subsequently, complaints about the industry are now common and consumers have been alerted - read the ABC story - “Consumers warned after complaints surge against solar companies.”