11
Jul
2018

ACCC Report on Electricity Prices

ACCC Report on Electricity Prices

The ACCC report on electricity prices, and the associated address by Turnbull at the Queensland Press Club, were not available on either’s webites at the time of writing this at 9.00pm and after. However copies of the report were available to the media, which also had an oral version of Turnbull’s 15 minute to the Press Club. These articles from The Australian include references to what appear to be the main points or the main emissions made orally by both Turnbull and Sims. It appears that the prices issue will again be a major item tomorrow in The Australian.

The main points emerging from statements made by Turnbull/Sims include

  • Turnbull has recognised that prices rises are a major political, intra-party issue and, as such, must be explained (sic) as not being due to climate change policy. Sims seems to agree that something must be done to stop other causes (ie non-policy) of price rises, which he “explains” as due to an electricity market that has been prevented from working competitively. He does not say why the Competition Commission did not take preventative action when “unacceptable” price rises previously  occurred, but makes undesirable proposals such as the government underwriting the construction of “firm” low-cost generation.

    This seems to be supported by Turnbull and it implies that in addition to the guarantees in the NEG scheme (which Sims diplomatically supports), the government will now include in those guarantees some provision on prices which was, as Abbott recently pointed out, absent from its original version. This is obviously an attempt by Turnbull to attract support from the Nationals , who have been calling for governmental support for coal-fired generators. Whether it will be supported by Turnbull remains to be seen.

    If carried out, Abbott  and other conservatives would accept that the bottom line will be even further government intrusion into the electricity market by price controls (this despite Turnbull boasting to his Queensland audience that he supports market forces!) . With the increase in costs to electricity production and supply caused by CC policy, there will also have to be an increase in subsidies to producers, not a reduction as one or both the speakers suggested, to prevent the price rises which would otherwise occur. Overall, this would suit Turnbull’s socialistic tendencies and would doubtless suit Labor.
  • Virtually no reference was made by Turnbull to the policy of reducing carbon emissions in accord with the 2015 Paris agreement and which was ratified by Turnbull. This has been the major cause of the increase in wholesale electric prices since 2015 (varying from over double in NSW to 250 percent in Victoria and South Australia) and to which have to be added the doubling of the cost of renewable energy certificates required by major generators. This appears to be contrary to the claim by both Turnbull and Sims (ACCC head) that retailers have been mainly responsible for the increase in prices, the implication being that retailers have colluded to add significantly to the prices which they obtained from wholesalers (in some cases, however, the retailers are owned by the wholesalers). The increase in wholesale prices and renewable certificates indicate that it is not the retailers who are the main offenders.
  • The hope by Turnbull is that he can continue to support the nonsense that Australia has to accept Paris and this NEG is the way to do it. He judges that he can carry this through to the next election, even if he doesn’t do well in the upcoming by elections. If the Coalition doesn’t do well in the main election, does that matter to Turnbull?

Polling and Electricity Prices Commentary – Correction

My Commentary of 9 July discussing the latest Newspoll needs a correction because I wrongly stated that it only covered the February-March period in 2018 and this only showed an increase in Coalition polling from 46/54 TPP in the October-December period to 47/53 in Feb-March. In fact, I overlooked the latest Apr-June polling period showing a 48/52 Coalition poll, an increase of two percentage points on the Oct-Dec period. I also incorrectly suggested that The Australian’s political editor, Simon Benson, was wrong in using the 48/52 poll as the latest: my apologies to Simon. This error doesn’t mean that the implications I drew need changing: the Coalition is still well below its 2016 election result of 50.4 percent and still needs radical changes in its policies and leadership.

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