Shock - Greens, Labor and Libs agree on electricity reform

Every major party in federal politics seems to be on the same page in terms of the need for reform of the electricity sector, now all we need is action.

The inquiry report from the Senate Select Committee on Electricity Prices illustrated a rare case of not just bi-partisanship but quad-partisanship on the priority of better regulating monopoly electricity networks and providing greater incentives for reducing electricity demand, rather than just selling more electricity.  

Predictably, the Liberal Party made additional remarks about how horrible a carbon tax was, Senator Xenophon tried to paint energy retailer CEOs as ruthlessly exploitative fat cats, and the Greens wanted regulators to place more priority on the environment. Nonetheless, they all signed onto a report that agreed that, in relation to recent large increases in power prices:

“The most significant of these is inefficient over-investment in network infrastructure—the poles and wires.”

They also agreed on some quite hefty and politically contentious reforms such as the widespread roll-out of smart meters and time-varying electricity prices; reducing the cost of capital allowances for networks, vesting AEMO with full transmission planning powers, and establishing a payment system for peak demand reductions.

While many of the recommendations have been made by others such as the Australian Energy Market Commission, the Productivity Commission and Professor Ross Garnaut; the claim by Keith Orchison yesterday that the report was simply an exercise in banality is unfairly harsh. 

Sure the conclusions and recommendations would not come as a revelation for most readers of Climate Spectator. But it is a relief that a Parliamentary committee with membership drawn from across the political spectrum can agree on this issue, rather than shifting the blame onto scapegoats like solar PV and wind power, like many state government politicians have tried to do. 

Make no mistake following through on the recommendations within this report means taking on some powerful political opponents. 

First and foremost will be the Treasuries of the Queensland and NSW state governments who speak via their government-owned energy company mouthpieces.  Then there’s the tabloid newspapers keen to convert smart meters and time of use pricing into a story of big utilities slugging the battler (and giving him cancer just for a bit of extra drama). Private network companies have less to fear but will still be on-guard, and the generators won’t like the idea of actively encouraging further reductions in demand. 

So the fact that these politicians have all signed onto this report’s recommendations will be helpful in curtailing short-term political opportunism when the opponents start their henny penny tirades. Although then again Tony Abbott seems to be rather starved for such opportunities since the carbon price failed to materialise into a cobra strike or python squeeze, so maybe I shouldn’t be so optimistic.

So while we’ve got everyone nodding their heads about the need for reform, I thought it would be helpful to summarise in the table below the various assorted items for reform and where everyone stands. This can then become a checklist we can reference back to as we watch the grass grow under our feet waiting for change to happen.


Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles