The network strikes back

Grid Australia has threatened legal action against the leader of a group seeking to stop overinvestment in poles and wires in NSW. It shows how sensitive networks have become and is a sign they're concerned long overdue reform may be coming.

Going by Gandhi’s dictum – first they ignore you, then they ridicule you, then they fight you, then you win – we must be well on the way to major reform of the national electricity market.

Last Saturday’s Sydney Morning Herald reported that Grid Australia, the peak body for transmission networks in the NEM and Western Australia, has written to Bruce Robertson of the Manning Alliance threatening him with legal action.

Robertson is a cattle farmer on the NSW north coast who is leading the fight against TransGrid’s proposed $160 Million Stroud-Taree transmission line proposal. He has no financial stake in the project, since his property is outside the revised corridor for the line, but is clearly incensed by the issues it raises for the regulation of the market, not to mention the impacts poor regulation are having on consumers as well as affected landowners.

Grid Australia (whose Chairman, Peter McIntyre, is also the Managing Director of
TransGrid) is apparently claiming that Robertson has defamed it and caused “significant hurt and damage”. He has been ordered to issue a public apology and pay legal costs. Grid Australia appears to be offended over statements Robertson apparently made in the media in October accusing it of “fabrications” in its evidence to the Senate inquiry into electricity prices.

Putting aside the question of whether Robertson has defamed Grid Australia (the legal status of which is unclear) and caused it “significant hurt and damage” (which is not in itself a tort), there are two main issues here. One is whether Robertson is factually correct in his criticisms. The other is Grid Australia’s threat of legal action.

In his supplementary submission to the Senate inquiry, Robertson accuses Grid Australia of making misleading and deceptive statements in regard to overall and peak demand (among other issues). In its submission to the inquiry, Grid Australia had claimed that “the impact of peak period demand growth is putting even greater pressure on the need for greater infrastructure investment.” Note the use of the present tense: nothing about the recent falls in peak demand, or about AEMO’s recent large reductions in its forecasts of peak demand increases.

According to AEMO’s 2012 National Electricity Forecasting Report, peak summer and
winter demand in NSW and the ACT have both fallen since 2005 (thanks mostly to a sharp fall summer peak demand in 2011-12, and a longer but less steep fall in winter peak demand since 2008). AEMO has also revised its NSW/ACT annual peak demand forecasts down significantly from its 2011 forecast of 1.9 per cent per year to 1.2 per cent per year over the next decade – a drop of over one-third. Ditto, more or less, the other regions in the NEM except Queensland, where peak demand rises of 2.5 per cent per year are still forecast, but way down from the 2011 forecast of 4.2 per cent. What it would take for AEMO to forecast lower demand is unclear.

Grid Australia made another submission to the Senate inquiry in response to Robertson’s criticisms, in which it refers to AEMO forecasts as justification for its members continuing to invest in new lines and substations. In my view it is one-all on this point: Robertson can point to the past, Grid Australia to the supposed future – even if it this not as rosy as it once looked for the transmission networks’ business model.

To the second main issue, it is one thing to defend an organisation’s reputation through the media and the political process, quite another to sool lawyers onto one’s detractors. This is akin to a SLAPP suit – that is, strategic litigation against public participation. The best known of these in Australia is the case of the “Gunns 20”, including Bob Brown, who were sued in 2004 by the timber company (now in liquidation) for various alleged offences, apparently in a bid to silence public opposition to the recently abandoned Tamar Valley pulp mill.

Gunns eventually lost the case and was forced to pay the defendants’ legal expenses; but the aim of SLAPP suits is not victory, rather the silencing of dissent by tying up opponents in complex and protracted litigation while intimidating other potential critics from speaking out.

Even if this is not intended as a SLAPP suit, it shows how sensitive the networks have become over repeated claims of overinvestment. But, as with the Gunns 20 case, it may have the reverse effect. A statement about the letter on the Manning Alliance Facebook page by its Chairman, Peter Epov, announces the Alliance’s obviously carefully considered, legally-vetted response to Grid Australia’s threat: “Go and get stuffed.”

The Total Environment Centre has been highlighting and challenging network gold plating for years, with little interest shown by the powers that be until this year, thanks to belated concern over rising prices. TransGrid’s Stroud-Taree proposal is not the only questionable one currently on its books. In our evidence to the Senate inquiry, TEC argued that TransGrid’s more expensive (at $227 million) Dumaresq-Lismore proposal is based on dubious and outdated demand forecasts and an inadequate consideration of alternatives including demand management and local generation.

The AER issued a highly critical report after a formal investigation of this proposal in 2010, and the demand forecasts were forensically demolished in a report by the Institute for Sustainable Futures in 2011, yet TransGrid refuses to put this looming white elephant out of its misery. It seems to answer only to its shareholders, the NSW Government, which will no doubt be happy to take the $172 million in dividends the company is planning to make this financial year alone.

TransGrid’s response, in its 2012 Annual Planning Report, to mounting evidence of lower peak as well as total demand was to defer the Stroud-Lansdowne line until the early 2020s, and the Dumaresq-Lismore line for a whole year until 2016 – possibly even longer! I’m sure the anxious farmers in the bucolic Dumaresq Valley and townsfolk in Tenterfield will be eternally grateful for a year or more’s respite from a project that would depress their land values and be a soulless eyesore built in order to bring more, mostly dirty fossil-fueled power down from Queensland via the QNI interconnector to supposedly service a NSW north coast population that has probably the highest regional uptake of PV systems in the country and that is crying out for more investment in local renewables.

The NSW government could put an end to this farce by instructing TransGrid, which seems to be the force behind Grid Australia, to retract the threat of legal action. The Stroud-Taree line is currently the subject of an independent investigation, but if the government were to do justice to the seriousness of the wider issue, it would also hold an independent inquiry into all alleged cases of transmission and distribution network gold-plating and how they can be avoided in future. But since it has a vested interest in the outcome, perhaps that should be done by the federal government. Although maybe Grid Australia will also seek to sue the Feds for defamation, and maybe the Productivity Commission, Ross Garnaut and Julia Gillard too.

Either way, this brouhaha reinforces the need for AEMO to become the transmission
network planner not just for Victoria but for the entire NEM. Theoretically this should,
make it less likely that projects of dubious merit become the subject of regulatory tests because AEMO, unlike transmission owners, does not have a conflict of interest.

Mark Byrne is Energy Market Advocate at the Total Environment Centre.