Shock tactics won't help Sydney's energy challenge

The state of Sydney's pylons, cables, transformers and switching yards is a key issue for 2014, but media scare stories about the risk of city blackouts adds little value to the debate.

There are numerous 'Sydneys' and they all have different energy needs as well as communities with differing views about energy supply tied in with their concerns about greenhouse gas emissions.

'Greater Sydney' encompasses 45 municipalities in an area from the CBD to the foothills of the Blue Mountains, to the edge of Wollongong and to the fringes of Newcastle.

The bit one lives in is arguably always the most important but the heart of the beast is the CBD, Port Botany, Mascot airport and their surrounding area east of Parramatta. Electricity networks are its arteries and they are getting clogged up.

Some 1.4 million people live in this area but its national importance lies in thousands of businesses calling it home, including 200 of Australia’s top 500 firms, and its roles as a financial hub and a transport hub for some 3 million visitors a year from around the world, and especially Asia.

Pull the plug on its power supply and the impact will be felt far and wide and in the hip pocket of the nation.

Almost all the electricity flowing in to the core comes from well outside its borders (mostly from the Hunter Valley and Lithgow, home to the big New South Wales coal plants, but also from the Snowy Hydro scheme and from interstate).

In an era of generation over-supply, the 2014 issue is not adequacy of production but the state of the pylons, cables, transformers, switching yards and other paraphernalia of the delivery system -- most of which is buried under central Sydney’s streets.

The “wires” businesses servicing this area are Transgrid (high voltage) and Ausgrid (distribution services), both looming large in Mike Baird’s privatisation plan. They are united at present in trying to figure out what to do to unclog the arteries.

In another time, these networks would have made decisions about what to do, got on with the job and retrieved their costs from the customers. Full stop.

In 2014, politics and the “social licence” to operate require a much less brusque way with customers and the community, who are feeling pretty bruised after five years in the eye of the power pricing storm whether they are householders, big commercial operators or industrialists.

The problem for Transgrid and Ausgrid is that they have 13 key cables, and their associated sub-stations, feeding the area denoted as "inner metropolitan and CBD" that were built in the 1960s and 1970s and are nearing the end of their working lives.

The Sydney Morning Herald has chosen to spotlight the situation as "Costly power cable needed to avert broad Sydney blackouts," telling startled readers that the service providers are engaged in "a desperate bid to reduce demand with cables predicted to fail by the summer of 2018".

Well, not quite.

As Transgrid and Ausgrid managers explained the situation in a community outreach meeting in Sydney last week, there is no immediate cause for alarm -- but nor do they, the regulators required to approve new developments and the government in Macquarie Street have forever to decide what to do.

Whatever development options are finally selected, the businesses are faced with a seven-year process of planning, approval and actual project delivery -- and a consumption environment where a cocktail of greater energy efficiency, some use of solar power and the ailing state of manufacturing vie with population growth and the development of large Barangaroo project.

The businesses would prefer to focus on either replacing the ageing cables with state-of-the-art versions at a cost of around $750 million or introducing a single 330 kV cable on a new route, with the traffic disruption this would cause, at $400m.

How far demand management could ameliorate the time pressures is a lively present debate -- and, of course, the greener players, including Clover Moore’s City of Sydney municipal mob, reckon the whole scene can be changed by investment in gas-fired trigeneration and greater use of solar, etcetera.

Transgrid and Ausgrid don’t have forever to come to a landing because the work needs to be included in their bids to the Australian Energy Regulator for network capex and opex approvals and their charges for the period 2015 to 2019.

Inevitably, this stuff gets tied in now with the privatisation row, but it really doesn’t matter who owns the cables; they are down there fading in to old age with the hassles (including sudden power failures) that come with it.

There is no need, however, for the likes of the SMH to carry on about "the city risks blackouts that stop trains and power lights and paralyse business".

Warding off cable and substation failures is a day-to-day task for the likes of Transgrid and Ausgrid. It’s why they have tough reliability standards to meet (at a cost that feeds in to user bills) and it is why they are permanently in the refurbishment business.

There is an ongoing debate about who sets the standards -- the current lot were put in place by Labor under pressure from the trade unions -- to ensure they are not politically warped, and there is a real issue about governments playing funny buggers with network capex programs to dodge unpopularity with voters, but there isn't, at this point, need for media scare stories to validate maintenance of the system’s health.

It’s just not a job that can be fudged or bludged, either.

The cables are there. They’re old and getting older. An efficient plan to take over their role needs to be nutted out without hullabaloo.