‘Panic’ is the only word capable of describing the mood among South Australia’s policymakers. Over the last few posts, STT has detailed a wealth of media coverage on SA’s self-inflicted energy debacle.
The former general manager of the Electricity Trust of South Australia (ETSA), Bruce Dinham is one of many groping around (knowing SA’s power supply, probably in the dark) for solutions to the disaster.
Bruce Dinham: How to slash South Australia’s electricity bills
6 July 2016
Investigation into huge increases to SA power bills
Huge electricity shock as EnergyAustralia bills to jump by $261 a year
Electricity bills in South Australia already nation’s highest, set to increase
State’s largest energy retailer, AGL, set to hike electricity bill prices
BLAMING ETSA’s privatisation for high electricity prices — as a recent The Advertiser editorial did — doesn’t solve the problem but it does give clues to what needs to be done.
For several years with Tom Playford’s ETSA, South Australia had the lowest electricity prices of any of the mainland states. Only Tasmania, with cheap hydro-electric power, was lower.
Today SA’s price is about the highest, so it is interesting to compare what we had or didn’t have then with what we have now.
We didn’t have retailers, we didn’t have generator bidding, we didn’t have a futures market, we didn’t have a governance bureaucracy costing over $160 million a year but in itself not producing a single unit of electricity, we didn’t have the so-called National Electricity Market which is neither national nor a market.
The Commonwealth has no constitutional authority or responsibility for electricity supply in the states but depends upon state legislation for which SA has been the bellwether and with a few large generators and fixed wiring to consumers who have no choice of supplier it in no way resembles a trading market.
There is no need for a bidding arrangement or a futures market. Any competent system operator would or should know the condition, actual costs and performance of each generator and schedule them accordingly for optimum combined output.
Retailers are also unnecessary. As such they don’t own or operate any part of the generation, transmission or distribution systems and contribute nothing to the production or delivery of electricity.
They send out the bills and collect and distribute the money but they don’t own or read the meters. The money function could almost certainly be done more efficiently by the distributor, who does own and read the meters.
The argument that retailers compete and keep prices down is a farce. The electricity you get comes from the same generator, through the same wires and the cost of producing and delivering it to your premises is exactly the same regardless of whom your retailer may be.
Get rid of retailers, the ridiculous generator bidding arrangement, the futures market and much of the governance bureaucracy, none of which are necessary and we could significantly reduce the cost of electricity.
Wind and solar renewables can increase supply costs because they are intermittent and unreliable. To maintain voltage and frequency and system stability they must be backed up continuously with conventional generation or recoverable storage. This means, in effect, that we have to operate and maintain two systems at the same time.
As well as the obvious problems with our present supply, the closure of the Leigh Creek Coalfield and Northern Power Station mean that much of the electricity on which we depend will come over 800km of vulnerable overhead transmission line from brown coal-fired generators in Victoria.
In the circumstances we now have there is clearly a need for an open and comprehensive public inquiry into cost and reliability and future arrangements for our electricity supply. As present arrangements depend upon SA legislation, the responsibility for such an inquiry clearly rests with our State Government.
So the question is: When is it going to happen?
Bruce Dinham is the former general manager of ETSA.
STT is in full agreement with Bruce Dinham’s observations about legendary former Premier Tom Playford’s development of ETSA and its ability to deliver reliable power at prices which were once the lowest in the world: ETSA: Sir Tom Playford’s Ghost
However, South Australia is a victim of not only the stupidity of a succession of Labor governments – starting with Mike Rann in 2002 – like all Australian states – it is subject to the Federal government’s Large-Scale Renewable Energy Target.
Under the LRET, all Australian power consumers are being whacked with the massive cost of subsidising wind power; a cost which will soon hit $3 billion a year as a Federal power tax, on top of their already punishing power bills: half of which will go to wind power outfits as REC subsidy; and the other half of which will be collected as a penalty, payable to the Federal government (see our post here).
The only difference between South Australians and their neighbours is that South Australia launched into wind power with a vengeance; and is, accordingly, reaping what its political betters have already sown. Whereas, states like Queensland and Western Australia did not.
While Bruce Dinham’s suggestion of an open and comprehensive public inquiry into the fiasco is noble, SA’s political brains trust needs look no further than the pages of STT.
What’s occurred in South Australia is no mystery; it’s inevitable. We told you so.