Economic Mercy Mission: Monash Forum’s Drive for Reliable & Affordable Power Gets Steamed-Up

AGL’s threat to shut down Liddell has Liberal MPs seriously steamed up.

 

Coal powers Australia: not sunshine, not breezes and, if you’re told otherwise, you’re being conned. So, keeping big base-load power generators in the game matters.

That’s if you’re concerned about having power available 24 x 365 at prices that both businesses and households can afford.

It’s that simple metric that has motivated the Monash Forum, a group of 30 Federal Liberal and National MPs determined to restore Australia’s rightful place as one of the world’s energy superpowers. It lost its title, in the space of a little over a decade, due to massive subsidies and mandated targets in favour of chaotic and unreliable wind and solar, backed up with punitive fines levied on retailers who fail to purchase the Renewable Energy Certificates, doled out to wind and large-scale solar generators.

The Monash Forum is headed up by New South Wales based, Craig Kelly. Here’s a little more on Kelly, and his gang’s push for a return to common sense.

Craig Kelly warns of class action if AGL doesn’t sell Liddell
The Australian
Joe Kelly
19 April 2018

Liberal MP Craig Kelly has challenged competition chief Rod Sims to act against AGL for planning to close the Liddell coal-fired power station in NSW, arguing it could expose the company to “one of the largest class-action claims our nation has seen”.

Mr Kelly, the chairman of the ­Coalition’s backbench committee on energy and the environment, said there was scope to take ­action against AGL under revamped misuse of market power provisions at section 46 of the Competition and Consumer Act.

In a letter to the chairman of the Australian Competition & Consumer Commission, Mr Kelly said he disagreed with Mr Sims’ argument that competition laws could not force a company to sell an asset.

Mr Kelly, one of the leading members of the Monash Forum pushing for the government to build a new coal-fired power ­station, said there was a precedent to take legal action.

He cited a case in the late 1980s in which Queensland Wire — a barbed wire producer — had successfully constructed a case of misuse of market power against BHP after the mining giant refused to sell its “Y-bar”, a product used to make picket fences.

Mr Kelly warned Mr Sims there was a provision under section 82 of the act allowing consumers to form a class action if the closure of the coal-fired power station resulted in an increase in electricity prices.

“AGL are playing a game of Russian roulette with the competition laws,” Mr Kelly told The Australian. “It’s not the ACCC that’s their biggest concern, but a private class action from every consumer, business and industry in the nation that could suffer a loss through increased electricity prices from Liddell closing.’’

Liberal Eric Abetz backed the push, saying the competition watchdog should do “everything within its power to deal with what is clearly a misuse of market power”.

Senator Abetz said the government should either reform competition law or nationalise Liddell if the ACCC did not have the power to force a sale.

Competition law expert Hank Spier said it would be difficult to penalise AGL for not wanting to sell one of its assets.

He said it would be “almost impossible” to prove the company was taking Liddell offline with the intention of reducing competition and ­increasing energy prices.
The Australian

Craig Kelly: Monash Forum’s front man & people’s champion.

 

In the deliberations surrounding the mooted National Energy Guarantee, Australia’s Treasurer, Scott Morrison and Energy Minister, Josh Frydenberg have been telling the press and all those concerned for weeks now that the NEG spells the end of subsidies for wind and solar power.

STT hears that the Monash Forum is going to hold Morrison and Frydenberg to their repeated and very public musings.

Taken at their word, Morrison and Frydenberg have effectively announced the end of the Renewable Energy Certificate (the subsidy dished out under the LRET).

Frydenberg has repeatedly stated that, under the NEG, subsidies to wind and solar end in 2020 (Morrison seems to think they already have). For that to come about, there needs to be legislation ending the operation of the LRET, 10 years early.

Now, if that were the case, Australian power consumers would save something like $30 billion, that would have otherwise been dished out in RECs to renewables rent seekers, with that amount directly added to retail power bills.

As it stands, there will need to be 330 million RECs purchased by power retailers from wind and large-scale solar generators between 2020 and 2031. At present, RECs are trading at $85 each and are tipped to hit $93, meaning that Frydenberg’s promise to end wind and solar subsidies in 2020 will save Australian households and businesses at least $28 billion.

With the Monash Forum on the war path, Morrison and Frydenberg are going to be reminded of the adage (particularly applicable in politics) that sometimes it pays to make your words soft and palatable, in case you’re forced to eat them.

One character who would have been a paid-up member of the Monash Forum (had he not retired from politics) is former Federal Senator for Queensland, Ron Boswell. Here’s Ron laying out Australia’s self-inflicted power pricing and supply calamity; how we got there and how to fix it.

Liddell must be replaced to avoid electricity price surge
The Australian
Ron Boswell
19 April 2018

If someone suggested that $3 billion in consumer-funded subsidies be paid to one energy source every year for the next 12 years, and if that one energy source was guaranteed significant market share for every one of those years, and if there were hundreds of millions of dollars available in grants and concessional loans to projects limited to that one energy source, would that policy approach qualify as a technology-neutral?

The millstone around the neck of Australia’s energy policy is the renewable energy target. It is a remarkably generous gift to wind and solar energy, and one that will keep on giving until 2030. It is impossible to debate energy policy sensibly without reference to the gold-plated pipeline of tens of billions of dollars of consumer and taxpayer-funded subsidies to the renewable sector.

The unprecedented government intervention in the energy market embodied in the RET is essential context to the debate about the future of the Liddell coal-fired power station in NSW’s Hunter Valley. We know its closure will cause electricity prices to rise unless it is replaced by comparable low-cost baseload energy.

We have seen this before. The closure of Hazelwood in Victoria’s Latrobe Valley led to wholesale energy prices rising by 85 per cent. With the energy market tighter than ever, it stands to reason that Liddell’s closure will cause a large surge in electricity prices.

Higher prices are an appetising prospect for Liddell’s owner, AGL. That’s why it doesn’t want to sell Liddell to another operator that would keep it open for up to another decade. AGL’s chief executive, Andy Vesey, clearly isn’t worried by the impact on energy consumers from large manufacturers such as BlueScope to small businesses and low-income Australians. But don’t take my word for it. As the Australian Competi­tion & Consumer Commission’s Rod Sims said on Friday, AGL is “quite happy to not give much thought to the public interest”.

Who will stand up for the public interest? Some argue that any governmental pressure on the owner of Liddell is unwise, especially for a Coalition government. Some have likened the option to socialism. Rubbish. The energy market was socialised by intervention a long time ago. A $45bn subsidy and guaranteed market share for renewables is not socialism? Would the car market be a real market if the government said 23 per cent of cars sold had to be a Tesla and that Tesla would receive a subsidy of $30,000 for every car sold? It’s fair to say that when it comes to energy, the government intervention Rubicon was crossed long ago.

And governments of any complexion have a responsibility to ensure the provision of essential services. Electricity is an essential service, and not at any price. It is not plausible for a federal government to sit helpless while a company led by a latter-day Sol Trujillo ruthlessly holds manufacturers, food processors, farmers and low-income earners to ransom. Government ministers say they have no power to compel AGL to sell Liddell. As a bush lawyer, I find it a bit odd that AGL’s actions are not considered to be “substantially lessening competi­tion in a substantial market” — the test of misuse of market power.

But the government does have leverage and it should use it. We know AGL is cynically using barriers to entry to keep supply tight and potential competitors out. So why doesn’t the government act to get more supply and more competitors into the energy market in a pro-market way?

Given that the authorities believe supply will be short and ­prices too high if Liddell closes, the government should put out a tender for the supply of up to 2000 megawatts of power (Liddell’s nameplate capacity). It should dictate that the supply must be reliable and available 24/7, and that the lowest price will win the tender. No subsidies for any energy source. The option could hardly be less socialist.

Given the ACCC has expressed concern about the lack of competition, it also should indicate that a new operator or group of generators is preferred. But the overriding consideration should be price.

The power should be contracted for at least 15 years, thus eliminating the political risk posed by the threat of a change of mind by an incoming government.

There will be plenty of investor interest, within Australia and from overseas. And it’s an approach consistent with pro-market principles. It would mean assured supply for energy-intensive manufacturers and price relief for households and pensioners.

For the first time in a long time the energy market would have some real competition. For the first time in a long time, the energy consumer would be the winner.
The Australian

Ron Boswell: saving your Country means killing the LRET, now.

About stopthesethings

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

Comments

  1. Son of a goat says:

    Why has happened with accountability and governance with the regulators in this country?

    The banking royal commission has opened the lid on systemic corruption within our financial sector. One has to ask where has been APRA ( Australian Prudential Regulation Authority) for the past decade?

    Similarly the AEMO and other authorities that oversee our electricity grid and markets are blinded by ideology and self interest have put this country’s one time advantage of cheap/ reliable power into a death of a thousand cuts.

    Unfortunately it takes an economic and social disaster for govt’s to bring back due diligence to the table.

    Our PM, treasurer and energy minister are too weak to stand up to the zealots. Unfortunately as STT says, we are all about to sit down to a banquet of consequences.

  2. With wind power? hovering around 10% CF for the last few days, it stands to reason that we cannot, and should not endure this ludicrous situation, where the most unreliable power source is favoured above the cheapest and more reliable power source. i.e. fossil fuelled power, most notably coal! The LRET has to go. The wind and solar spruikers should be held to account! Were it not for the LRET and RET, the industry would simply not exist! And if it didn’t, where would we be today? We would be enjoying cheap, uninterrupted power like we remember from our childhood! We would most likely have a mixture of Nuclear and HELE power stations, supplemented by hydro. Totally impervious to the vagaries of the weather! And a much more compact and contained power generation system, rather than these sprawling monoliths that gasp at the wind to produce a modicum of power.
    I wish the Monash Forum well, and God Speed to them!

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