Peak groups report on electricity prices

The coming together of The Australian Industry Group, Brotherhood of St Lawrence, Choice and the Energy Efficiency Council, including their involvement in a study into electricity prices (which have been raised by 50% in he last 5 years) has a positive side. And in the opinion of this blog, this is for two very good reasons. The first is that any move that brings different and disparate groups together is doing something about the problem sets a good example that might encourage others. The second is that anything that sheds a light on something that not only brings hardship to many, but is also detrimental to the nation’s future economic and social health, is good.

However a proposal in the report, to enable consumers to sell demand response to the wholesale market during times of super peak demand, is wide off the mark. While it tries to deal with the finding that the electricity companies tend to charge at the peak rates, the market mechanism is seen as the way to fix the problem. The report also calls for electricity distribution companies to halt infrastructure expenditure for now wherever this is possible. This is recognition that much of the rising electricity prices are fueled by this expenditure. Overlooked is that the system provided in the course of government privatisations have enabled rorting. Huge sums being spent on “infrastructure consultation fees” to parent companies overseas.  Provision of profit guarantees for every dollar spent has further encourages rorting.

It is likely that this approach is influenced by the position of the Australian Industry Group and the Energy Efficiency Council, representing a range of technology, consultation and some of the energy supply companies. They are bound to look after heir members’ interests. They recognise that harms that are being caused, at the same time as retain faith in the economic rationalism of recent decades and continue to support the privatisation of Australia’s electricity generation and supply.

What is missed is that the present situation is the result of the economic agenda they support. It gave birth to the existing pricing system. Yes it can be improved to some extent. But this will be limited to tinkering around the edges, paying to attention to the symptoms and neglecting to tackle the cause. Sight should never be lost of the fact that the existing pricing system was included in the package as a sweetener to investors. The call for the scaling back on infrastructure expenditure amounts to replacing one sweetener with another. Australia’s electricity and generation should be based on what is needed for Australia and not on the narrow interests of major investors. It is a principle that should never be compromised.

Regardless of criticism about the shortcomings of what this group is proposing, the call for the introduction of time of use pricing and reduction of demand by strengthening energy efficiency programs are positive proposals that need to be fleshed out and deserve support.

Most important is that others should become active, put forward ideas, seek the most effective ways to respond collectively. This blog has begun to do its bit to raise the conversation and encourages others to participate.