Watch out for an energy policy battle

A bevy of official reports on Australia's energy policy are set to spark heated debate in 2015, keeping energy enthusiasts busy throughout the year.

Like it or not, it’s time to start thinking about 2015, especially if you are in the energy business. The list of reviews to appear early next year is starting to look quite formidable.

Top of the list obviously is the federal government’s energy white paper. The green paper says we can expect the final version in “late 2014” but it is more likely to be the first quarter of next year at the present pace of proceedings.

For a start, it will need to include the outcome of the renewable energy target row, and who knows when this will arrive?

The government still has to release its own take on the Warburton panel review (allegedly soon) and negotiate an outcome with either the Labor opposition or the Senate crossbench.

Less prominently in view are a number of other reports, including the next national energy security assessment (or NESA in the alphabet soup).

The last NESA was published in 2011 and the government says in the green paper that it will put out a new one in 2015.

Juggling the timing of NESA and the white paper will be interesting; the former is highly relevant for the latter and it wouldn’t be a good look if it appears after the white paper and contains contradictory thoughts.

Another that will be in the sights of the Greens and the environmental movement for sure is a review of our national greenhouse gas abatement goal.

Every galah in the energy petshop regularly squawks about the current target of 5 per cent below 2000 levels by 2020 -- the Energy Supply Association is claiming currently that the power generation sector, on present trends, will deliver its share of this goal by as early as 2015-16 -- and we can pretty well bet that the noise levels about the next target will be even louder than those reached in the RET debate.

This carry-on, of course, will be a prelude to the United Nations’ next summit on climate change -- to be held in Paris in December 2015 -- so we can look forward to a tsunami of propaganda, dire warnings and street parties flooding in next spring, if not earlier.

Another potential challenge for the federal, New South Wales and Victorian governments in particular will be the appearance of a Productivity Commission review of the barriers to efficient gas markets that has just been announced. A research paper on it is scheduled to appear in March next year.

This is not the only material affecting the federal government’s white paper deliberations but it is decidedly awkwardly timed for the Baird government, since the state election is due to be held on March 28. The local dog’s breakfast that is NSW gas supply policy is surefire cause for a political fight in the campaign.

The Productivity Commission has given itself the task of “analyzing the potential costs and benefits of policies that affect the timing and location of exploration and production activity, including regulations pursuing environmental and other land management objectives” and the Baird government is hardly likely to emerge from such scrutiny smelling of roses.

Judging by the recently-released draft report of the Harper review of national competition policy, the final report (promised for March next year) also will have a number of trenchant things to say about both regulation of gas and the inability of jurisdictions to complete the electricity reform process that is marking its 20th anniversary this year (1994 being when the Council of Australian Governments, chaired by Paul Keating, six prime ministers ago, formally adopted the recommendations of the Hilmer report).

As if this isn’t enough, the first half of 2015 is certain to see an all-out brawl over electricity asset privatisation, as both the NSW and Queensland governments seek voter support for their sales programs.

A further ingredient in this volatile mix will the first decisions from the Australian Energy Regulator on what networks may spend and may charge consumers between 2015 and 2019, while suppliers will be stepping up their campaign for big changes to power distribution tariffs, arguing the existing system is inequitable and will drive hundreds of millions of dollars of new and unnecessary spending on infrastructure.

With some five million homes with air-conditioners and 1.3 million with rooftop solar arrays -- all in line to lose their alleged free rides on other consumers -- this is a hard sell for the suppliers and a harder one for policymakers if they agree to pursue tariff reform.

The current political mindset at state level is to procrastinate on this. A 10-year implementation process would be welcomed by many of them, but the power businesses are telling them passage on a slow boat isn’t an option. Three to five years is the preferred option.

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