27
Jul
2018

Questioning Continues Regarding Effects on Pricing under NEG

Questioning Continues Regarding Effects on Pricing Under NEG

Today’s Australian reports that the views of three groups in the Senate appear to depend on whether and/or by how much the supposed final version of NEG will reduce costs. Pauline Hanson says she is “strongly against” the NEG and wants to pull out of the Paris accord requiring reduced carbon emissions as coal-fired power stations would deliver cheaper power. Senator Leyonhjelm, the Liberal Democrat, said he wanted to see evidence the NEG would dramatically lower power prices before he would back the deal: “they need to fall by at least 50 per cent to restore competitiveness and take pressure off households”.  The Centre Alliance’s Rex Patrick said he and Senate colleague Stirling Griff backed the NEG’s goals but their vote would depend on how much the policy brought down power bills: “we would expect on the pricing side for there to be a clear indication of what the savings will be, and that the modelling that generates those savings is released publicly, including all assumptions that were made,” Senator Patrick said (see Some Senate Opposition to NEG).

Given the virtually certain Labor opposition to NEG, this means the government would find it difficult to have it passed in the Senate.

Both The Australian and the AFR have also published letters expressing doubts about the cost effects of NEG. My letters in each of these papers are set out below.

It’s Difficult to See How Wind Will Bring Down Prices

Letter Published in The Australian, 27 July (Last para deleted by Ed)

You report the Energy Security Board’s claim that modeling of the final national energy guarantee shows that its adoption would result in savings of electricity bill to households of $550 a year over a decade (“Power price warning to Labor states”, 26/7)

Indeed it appears that under this NEG, wholesale prices are modeled to fall by over 40 per cent by 2021. A significant contributor to this fall is supposedly due to a large increase in investments in renewable (mainly wind)already committed.

However, no indication is given of how the more costly wind farms will cause such falls in prices. Perhaps the NEG will provide a government guaranteed price, with governments funding the additional cost compared with coal. That additional cost would have to include the additional investment in back-ups which would be needed when the wind or sun do not provide fuel.

[The debate surrounding NEG has reached the point of farce. Some ‘expert’ (sic) has a model which says a more costly investment in energy production will compete coal producers out of existence despite the latter’s much lower prices. Will anyone believe in such a model?]

Des Moore

Something Doesn’t Add Up in Energy Modeling

Letter published in AFR, 27 July 201

You report the Energy Security Board’s claim that modeling of the “final” NEG shows that its adoption would result in large savings of electricity bills to households. Indeed it appears that under this NEG, wholesale prices are modeled to fall by more than 40 per cent by 2021. A big contributor to this fall is supposedly due to a large increase in investments in renewable (mainly wind) which are already committed.

However, no indication is given of how the more costly wind farms will cause such falls in prices. Perhaps the NEG will provide a government guaranteed price, with governments funding the additional cost compared with coal. That additional cost would have to include of course the additional investment in back-ups which would be needed when the wind or sun do not provide fuel.

Those who have followed the debate on NEG will be interested to ascertain how a more costly investment is modeled to produce lower prices

Des Moore, South Yarra

Stone Criticises Paul Kelly’s Views on Trump

Although not directly related to climate change policy, John Stone has an article in today’s Spectator which takes to task Paul Kelly’s view on Trump (see Stone’s Critique of Paul Kelly on Trump). Stone rightly says that  Kelly has conveyed a false perspective on Trump and that this perspective has wrongly influenced Australian conservatives and their attacks on government policies.

One of the issues on which Stone criticizes Kelly is climate change and Trump’s withdrawal from the Paris accord. Kelly argues that it has been an elemental mistake by our conservatives to wish that our government follow suit because “they forget what Trump’s alternative and incoherent ‘big picture’ means for America and the world”. But, in fact, Stone says, Americans  “see Trump’s actions (as having) already transformed America into a far better place than that to which Barack Obama and his immediate three predecessors had reduced it.”

Such criticisms also apply to all too many other Australian journalists and their failure to see through government policies which purport to improve our lifestyle but in practice make us worse off unnecessarily . This is very much the case with climate change and the cost of government policies designed to reduce our usage of fossil fuels.

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