RET Protection Racket: PM Puts Retailers on ‘Double Secret Probation’ for Price ‘Gouging’

 

Australia’s self-inflicted power pricing and supply calamity lunges from the patently absurd to the utterly ridiculous.

In the week just gone, Australia’s patrician and aloof PM, Malcolm Turnbull dragged the heads of Australia’s electricity retailers to Canberra for a shellacking that was supposed to impress Australia’s battered and beleaguered power consumers.

To STT though, the PM’s performance was more political theatre and the veiled threats to retailers reminded STT of the bellicose but witless Dean Vernon Wormer in National Lampoon’s Animal House.

Overwhelmed by the antics of the frat boys from Delta, Dean Wormer doubles down to put them on ‘double secret probation’ (see the video above) – for those with slow internet, the exchange between Wormer and the smarmy, golden-haired suck-up, Greg Marmalard goes like this:

Dean Wormer: Greg, what is the worst fraternity on this campus?

Greg: That would be hard to say, sir. They’re each outstanding in their own way.

Dean Wormer: Cut the horseshit, son. I’ve got their disciplinary files right here. Who dropped a whole truckload of fizzies into the swim meet? Who delivered the medical school cadavers to the alumni dinner? Every Halloween, the trees are filled with underwear. Every spring, the toilets explode.

Greg: You’re talking about Delta, sir.

Dean Wormer: Of course I’m talking about Delta, you TWERP!!! This year is going to be different. This year we are going to grab the bull by the balls and kick those punks off campus.

Greg: What do you intend to do sir? Delta’s already on probation.

Dean Wormer: They are?

Greg: Yes, sir.

Dean Wormer: Oh. Then as of this moment, they’re on double secret probation!

Greg: Double secret probation, sir?

Dean Wormer: There is a little-known codicil in the Faber College constitution which gives the dean unlimited power to preserve order in time of campus emergency. Find me a way to revoke Delta’s charter. You live next door. Put Neidermeyer on it. He’s a sneaky little shit, just like you, right? [Greg nods] The time has come for someone to put their foot down. And that foot is me.

Now, it seems that Malcolm Turnbull has determined that it’s time for someone to put their foot down in Australia’s power market and that that foot is him.

Govt blitz on hidden power gouges
The Australian
David Crowe and Joe Kelly
9 August 2017

Power companies will be forced to overhaul their pricing plans as the Turnbull government drafts new rules to give households more scope to cut their electricity bills, amid fears customers are being charged $1500 more than needed on some contracts.

Malcolm Turnbull will put company chiefs on notice today to prepare for tougher electricity market rules, as government officials canvass changes that would require retailers to reveal more of their price changes to customers.

Writing in The Australian today, Energy Minister Josh Frydenberg warns of “ridiculous” situations where “loyal customers are left languishing” because companies have no obligation to let them know when their prices rise.

“As the rules currently stand, retailers are not obliged to inform customers when their discount period ends if their contract is ­ongoing,” Mr Frydenberg writes.

“This should change, as ­customers deserve to know not only when the bill is changing, but by how much.”

The government estimates that half of all electricity customers are on contracts that offer a low-price period but place no requirement on the company to reveal when the discounts end and the prices soar.

The issue is turning into a flashpoint with the industry as the government vows to do more to ease the pressure on power prices, following a move to ­impose ­export limits on gas companies to boost local supplies.

The government has advice that shows there were 1178 residential market electricity offers available on the east coast early this month on its Energy Made Easy comparison service.

More than half of these gave retailers full scope to vary their prices with little or no notice.

The Prime Minister will try to shift his agenda to energy affordability after yesterday sealing a Coalition agreement on a ­“people’s vote” to decide same-sex marriage, as the government struggles in the polls and attempts to assure voters it is acting on cost-of-living issues.

The government is preparing to call in the Australian Competition & Consumer Commission if needed to force disclosure from power companies, as the market watchdog investigates the retail market and its profit margins.

According to independent estimates, the gap between the best and worst contracts on offer can range from $900 to $1500, signalling the size of the gains to households under better rules.

“Too many families are not on the best power deal they are en­titled to,” Mr Turnbull said in a statement last night.

“A significant number of customers remain on standing offers, or market offers with expired benefit periods — potentially more than half of all customers. We are particularly concerned that many of those customers are the people least able to afford paying more.

“This situation must be addressed — urgently and directly. We do not want households to pay one cent more than they have to.”

Bill Shorten has accused Mr Turnbull of making “excuses” for not being able to bring down energy prices, as the wider debate over energy and climate policy turns towards a fight over retail prices.

The Opposition Leader said Mr Turnbull had a “shoulder-shrugging style” that said to voters: “What do you expect me to do about it? I’m only the Prime Minister.”

The Coalition remains divided over long-term energy policy. Former prime minister Tony Abbott has called for a freeze of the Renewable Energy Target ahead of a decision on whether to adopt a clean energy target recommended by commonwealth Chief Scientist Alan Finkel.

Today’s meeting will include Mr Turnbull and Mr Frydenberg, Energy Australia’s Catherine Tanna, Origin Energy’s Frank Calabria, AGL’s Andy Vesey, Snowy Hydro’s Paul Broad, Momentum Energy’s Paul Geason, Alinta Energy’s Jeff Dimey, Simply Energy’s Carly Wishart and the Australian Energy Council’s Matthew Warren.

Mr Warren said last week the industry welcomed the meeting as a chance to discuss government regulations that created uncertainty and drove up prices.

“We think the cost of energy in Australia is too high and we have to fix that,” Mr Warren said. “The crisis we have now has been a decade in the making, a decade of political uncertainty.”

Kerry Schott, who will chair the Energy Security Board established by the Council of Australian Governments’ energy council, told The Australian yesterday the introduction of the Finkel reforms would take about three years — although some could be implemented sooner.

Dr Schott said the key challenge was to manage the transition to renewables while keeping a close eye over power prices.

“We’ve really been reliant on coal for a long time,” she said. “The percentage of renewables is going up so dealing with that new world is really quite pressing.”

Dr Schott argued that coal would remain a major part of the energy mix, adding that there was no country that could “run an electricity market without some synchronous energy which is either coal or gas or something of that nature”.

Dr Schott’s deputy chair, Clare Savage, said the Finkel review had consulted widely in devising its recommendations and the ESB would work to ensure they were implemented to ensure Australia had a secure, reliable and affordable energy system into the future.

The ESB was one of the recommendations in the Finkel Review. It suggested the ESB provide an inaugural report on the “health” of the national energy market to the COAG energy council by the end of the year.
The Australian

That’s right, you’re all on Double Secret Probation.

 

South Australia didn’t end up at the top of the league ladder (see above) with average retail prices at $471.20 per MWh (47.12 cents per KWh) as a result of retailers playing discounting games with customers.

Compare (occasionally) wind and solar powered SA with always coal powered Victoria and you might spot a slight difference in the prevailing retail price.

We’ll scale the numbers up to the price per MWh (a MW = 1,000 KW) for ease of reference and mathematical elegance.

In Victoria retail customers are paying an average of $346.50 per MWh for their power, whereas, just over the border, notionally wind and solar powered South Australians are paying $471.20: $124.70 per MWh (or 36%) more than their Victorian cousins pay for power.

The Federal Large-Scale RET is the primary cause of rocketing power prices and grid insecurity. Turnbull, Frydenberg and the retailers all know it.

Frydenberg continues to throw the blame at the States, particularly SA, and their ‘aspirational’ RETs, but none of them bring with them subsidies for large-scale wind and solar of the magnitude available under the Federal LRET: subsidies which now add $3 billion a year to all Australian power bills, have already added $15 billion to those power bills and, unless and until the LRET is capped or scrapped, will add a further $42 billion to Australian power bills between now and 2031, when the LRET expires (see our post here).

South Australia has the highest power prices in the world because it did precisely what the Federal Large-Scale RET encouraged it to do.

Over the course of 2017 the cost of REC subsidies to wind and solar generators, combined with the cost of the shortfall penalty extracted from retailers, will add around $2.5 billion to power bills: It’s Time for Frydenberg & Turnbull to Come Clean on the Cost of Subsidised Wind Power

South Australia gets to boast about the having the highest power prices in the world, simply because it got ahead of the curve: South Australia’s Wind Power Obsession Leads to Highest Power Prices in the World

What Turnbull and Frydenberg won’t ever point to is the real cause of Australia’s power market calamity and nor will the retailers like AGL, Energy Australia and Origin – who are all profiting very nicely from the renewables energy rort.

Power chiefs push for decision on clean energy target
The Australian
David Crowe
10 August 2017

Company chiefs have urged Malcolm Turnbull to make a decision on a clean energy target in order to spur investment and boost supply, as they come under pressure to cut their prices in a political brawl over the cost of living.

The biggest electricity retailers, with more than eight million customers, put the onus on the Prime Minister to decide a new ­energy policy during a meeting in Canberra yesterday that agreed on stricter pricing rules to help households.

But the government is moving slowly on the clean energy target after a clash over the proposal within the Coalition partyroom, with conservative MPs opposing a road map that could see 42 per cent of electricity coming from ­renewable sources by 2030.

Mr Turnbull used the meeting with the energy company chiefs to assure Australians he was acting to reduce their power bills, unveiling a change to national rules to force retailers to tell customers when their rates are about to rise.

The Prime Minister set a deadline of next Friday for the companies to respond with proposals to tell customers when their discount ­periods end, a change that is hidden from million of households.

Backed by advice that some customers are paying $1500 more than they should every year, the government will direct the Australian Energy Market Commission to set tougher rules so that customers are told of their options.

“We are determined that they provide as much information as they can to the customers to ensure the customers can make those choices,” Mr Turnbull said.

The government believes about half of all household energy contracts give retailers unfettered scope to adjust prices without letting customers know they are being shifted to higher prices.

Energy Minister Josh Frydenberg said the new rule would give consumers more information while another initiative would prevent vulnerable families losing their discounts.

“Consumers now won’t be subject to losing all of their discount for a late payment if they are a hardship customer — that is going to help thousands of Australian families,” he said.

The meeting included chief ­executive of Energy Australia, Catherine Tanna, Origin Energy’s Frank Calabria, AGL’s Andy Vesey, Snowy Hydro’s Paul Broad and the Australian Energy Council’s Matthew Warren.

Greens environment spokesman Adam Bandt dismissed the new moves yesterday and called instead for tougher controls on prices, pointing to Grattan Institute research suggesting the lowest prices were in the most regulated markets.

Mr Bandt warned Victorian customers paid $2218 a year for a typical contract after almost a decade of deregulation, while those in the regulated market of the ACT paid about $1576 for the same ­energy, according to the Australian Energy Regulator.

Going far beyond the government’s pledge, the Greens are vowing to cap electricity prices.

Deputy Prime Minister and Nationals leader Barnaby Joyce told the company chiefs that a new high-efficiency coal power station was a way to lift supply and lower prices, but Mr Vesey made it clear his company would not be planning such a big investment when “carbon risk” clouded the industry.

Mr Vesey, Mr Calabria and Ms Tanna all argued the best way to improve supply was to create more certainty for investment with a ­decision on the clean energy target, a plan recommended by Chief scientist Alan Finkel in June but yet to be accepted by the government.

The industry chiefs warned that the hurdles to new investment were the biggest problem and that this was the result of years of policy uncertainty in Canberra.
The Australian

AGL’s Andrew Vesey gives the thumbs up to real price gouging.

 

Among those profiteering from the greatest single industry subsidy scheme and the largest mandated wealth transfer in Australian history, the term ‘policy certainty’ is merely code for ‘keep the subsidies coming’.

The retailers quoted above, AGL, Energy Australia and Origin not only wallow in the massive subsidies directed towards wind and large-scale solar (they’ve all invested heavily in both), they also benefit handsomely from the daily collapses in wind and solar power output.

All of them own and operate peaking power plants across the Eastern Grid (AGL runs its gas-steam plant at Torrens Island in SA as if it were a peaking power plant – see our post here), which allow them to engage in real ‘price gouging’ – charging the grid operator up to $14,000 per MWh (the regulated market cap) to keep the grid from collapsing, whenever wind power output collapses on a total and totally predictable basis.

This brand of stand-and-deliver market extortion has been going on for years and it all depends upon the inherent intermittency of wind and solar: South Australia’s Unbridled Wind Power Insanity: Wind Power Collapses see Spot Prices Rocket from $70 to $13,800 per MWh

The fact that Malcolm Turnbull and Josh Frydenberg are prepared to engage in energy market theatrics (and that’s all dragging retailers to Canberra amounted to), while continuing to run to the periphery – blaming States for what is clearly the result of Federal government legislation and pretending non-existent (or ridiculously costly) electricity storage offers some kind of solution – suggests they have absolutely no interest in tackling Australia’s electricity market debacle.

Australia’s miners, mineral processors and manufacturers have worked out that the primary, if not sole, cause of grid instability and rocketing power prices is the Federal government’s LRET: Australia’s Desperate Miners Demand End to Renewable Energy Madness: RET Must Go Now

By pretending otherwise, Turnbull and Frydenberg seem to be running a protection racket for the LRET and the retailer/generators profiting so very handsomely from it.

Try as they might, pretending to rap retailers over the knuckles will have absolutely no bearing on either grid stability or Australian power prices; both are the consequence of the LRET.

For now, Australian households and businesses can only sit back and suffer. But, as with everything in politics, there will be a reckoning.

Voters won’t limit their punishment to Double Secret Probation.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Noel Dean says:

    The Quickest way to stop the REC subsidies is for the Windfarm developers to provide complaint investigation evidence proving the sound pressure levels comply with 40dBA within 10 mts from a dwelling for all of the night time period with the 5dB penalty has been added in exchange for the REC subsidies, this is the law but not enforced.

    To stop the suffering of those affected, the wind farm developers should front up to the high court with the independent evidence commissioned by the Planning Ministers responsible, instead of the developers saying they are compliant without evidence. Going by the windtest report for the WAUBRA turbines, it is not mathematically possible for sound pressure levels less than 1km away from wind turbines at Cape Bridgewater could comply.

    The reason for that is that Cape Bridgewater turbines emit SACs, because I heard them within 10 mts of a house, As the sound level is more than 5 dB above the ambient background, therefore the measured sound limit is 40dB, allowing for SACs. Panely this becomes 35dB, and the sound measured with similar sized blades as at Cape Bridgewater there was a 13 dB increase in sound emitted by the operating turbines than the measured ambient background.

    NO measurements in this manner is not a valid noise/sound/air pressure assessment required to satisfy a valid complaint investigation,for any complainant.

    It is about time evidence is provided.

    Since our complaint made in mid 2009 till mid 2014 when all properties were sold there has been no evidence that SACs do not exist. No evidence that all of the night time period was measured within 10 mts of our property. This has been confirmed by ACCIONA Managing Director and the Planning Minister’s department in letters to the NWFC in 2017. The problem being the failure of the NWFC to read and understand the wording of these letters sent to him. In fact the letter from Acciona was dated 2 September 2016 to the Wind Farm Commissioner, the letter from the NWFC was 1 September 2016 in which NWFC closed our complaint investigation without the required conciliation.

    Noel Dean

  2. Turnbull and his mates are beyond redemption.
    Australia badly needs a ‘ Trump’, to drain the swamp.
    Weatherdill now spending $100 on shipping diesel generators from Europe ,–to help him out of a mess next summer.
    The world has indeed gone mad [ don’t tell the leftie luvvies at ABC/ Fairfax. ]

  3. Jaqueline Rovensky says:

    What is so patently obvious is that all this tough talk about companies having to give notice of pricing changes is a blind alley. It does not stop the price going up.
    Companies must be laughing out loud at the Governments antics to help them keep increasiing prices with impunity.
    It’s time this Federal Government stepped up and made a true stand on behalf of the people. Making it is easy STOP THE RET.
    The BULL is not yet ready to TURN. The problem for Australia is that he is still fixated with an ideology that has prove to be a load of old ‘codswallop’ and is incapable of recognising it.
    Maybe its time he either stood down or recognized his failures and put the the peopls and country first.
    We need changes NOW not next year, waiting until then will only make living and work opportunities harded to resolve.
    This PM and his Government needs to remember ‘a stitch in time saves nine’.

  4. $15 billion in subsidies – How many new HELE power stations couldn’t we have built with that money? I despair at the obvious lack of brains on display amongst our so-called leaders.

  5. Comical! The Australian and the prime minister’ spin doctors made out that Turnbull laid down the law and controlled the agenda with the energy providers. More than likely, the boot was on the other foot. Had one or two CEO’s threatened at the meeting to close one or more conventional power stations, it would have been fun to watch Turnbull squirm.
    I suspect the energy company CEO’s now have solid IOU’s from Turnbull as a result of that meeting. The taxpayer is well and truly on the hook.

  6. Son of a Goat says:

    On the day the legendary Glen Campbell passed away the prime minster met with Australia’s energy chiefs.

    Rumour has it, later that afternoon in the confines of the QANTAS lounge at Canberra airport them same energy chiefs with a few scotches under their belt broke out into song.

    The air was said to be resonating to the tune of “Rhinestone Cowboy.”

    there’s been a load of compromisin’ on the road
    to my horizon,
    but I’m going to be where the lights are shining
    on me.

    Yet again these Cowboys are riding roughshod over the Australian power consumer whilst our politicians cower in the darkness.

  7. The most pathetic response and it now goes all the way to the top is….. “WHAT DO YOU EXPECT ME TO DO ABOUT IT”…Not good enough Mr Shorten tell us what you would do to lower our cost of living.
    The Prime Minister can surely do something.

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