Electricity reform too slow: Productivity Commission. Last year, Prime Minister Julia Gillard obtained an agreement from the Council of Australian Governments for network reform. Photo: Luis Ascui Marcus Priest The Productivity Commission has criticised state and federal governments for failing to tackle rising power prices fast enough and argued energy reforms last year did not go far enough. The government’s independent think tank called for deregulation of retail power prices by 2015, full privatisation of state power assets, lowering of electricity network reliability standards, and staged roll-out of smart meters.
If the changes were implemented in NSW $1.1 billion in distribution network capital expenditure could be deferred. Critical peak pricing and smart meters could save the average home up to $200 a year. “The NEM [National Electricity Market] has too often proved to be a graveyard for reform proposals, which then remain as inert words in dead documents,” the commission says in a report on electricity networks. ‘Reducing benefits’ High-powered row looms on horizon. Upgrades battle: Who pays and who benefits are contentious issues. Photo: Reuters The parallel universe that is the electricity market has its own version of Blue Hills. Like the long-running radio drama, proponents of an upgrade to the connections between South Australia and the rest of the national electricity market have been pushing around various proposals for years.
One proposal to link directly to NSW was kiboshed after a legal challenge and now another proposal to upgrade the Heywood interconnector with Victoria is on the cards. Rather than just another example of the argy-bargy that can envelop planned infrastructure upgrades, the latest push is the first under new rules aimed at preventing so-called ''gold plating'' of the network.
Upgrades have been routine in the electricity industry. Advertisement The initial decline in demand in the later part of last decade was initially seen as an aberration. Electricity selloff 'failed to deliver' on cheaper power. Price shock: No benefits to Victorians over other states. Photo: Rob Homer The privatisation of government-owned electricity assets has failed to deliver cheaper power, with efficiency falling sharply as power prices have risen well above the underlying rate of inflation, a study by The Australia Institute has found.
Victoria was the first state to sell off its power sector assets, reaping the government windfall profits. Since then, the number of management staff has risen along with a surge in sales staff, which has blunted benefits from the move. Since privatisation in the 1990s, electricity prices have heavily outpaced the inflation rate, the study found, rising by 170 per cent compared with an increase of 60 per cent in the consumer price index. Advertisement Also notable is the fact that power prices in Victoria have risen in line with prices in other states, so that privatisation has delivered no specific benefits to consumers. In 1997 there was one manager for every 13 workers. Alert - Australia, electricity - mitch.webster - Truthstone Mail. Ment: Why electricity prices keep rising | Electricity.
By Tony Wood, Grattan Institute If there's logic behind the way Australian energy markets work, at first glance it's hard to fathom. Increases in power bills have previously been justified by our increasing demand. But as energy demand in Australia drops prices continue to rise. This raises numerous questions. In 2012-13, residential electricity prices increased by 14%, continuing a trend of double-digit increases going back to around 2007. The largest component of the price increase has come from costs imposed by the network distribution businesses, and yet these are regulated monopolies. Grattan Institute issued a report in December, 2012: Putting the customer back in front: how to make electricity prices cheaper. The report made four recommendations that have the potential to deliver savings to consumers of around $2.2 billion per year, a saving to the average domestic customer of $100 per year.
Special report: Australia’s electricity demand collapse. This is part 1 of a 2 part series. The 2nd part can be found here. Electricity demand has been sinking for the better part of four years. Bitter cold or relentless heat, weather extremes appear unable to spur demand – peak or overall – back to where it was pre-GFC, or perhaps more aptly, pre-solar boom. Yet we plough on accepting throwaway lines from executives and journalists that peak demand is a costly problem.
It was. And from forecasters we hear that all of a sudden overall demand is going to burst back to life. Analysing the six reasons why demand has gone down – according to industry players and the Australian Energy Market Operator – it’s clear those factors are only likely to further constrain demand, contrary to forecasts: -- High power prices. While it is right to say high prices have helped bring demand down, this is unlikely to change as prices are heading higher in the next few years; although rises should at least moderate. -- Solar PV. -- Manufacturing weakness. Crikey Clarifier: are renewables jacking up your power bills? UPDATE 3-China ups stakes in Australia power firms as Singapore retreats. China buys stakes in key Australian power assets. The world's biggest utility company by revenue, State Grid Corp of China (SGCC), which is also the world's seventh-largest company, is planning to buy stakes in Australian power assets worth billions of dollars, a move that will invite close scrutiny from the country's regulator.
Beijing-based state-owned State Grid yesterday said that it will acquire stakes in SPI (Australia) Assets (SPIAA) owned by Singapore Power Ltd, which includes electricity and gas networks that supply to Australia's two largest cities. Singapore Power is fully owned by the country's sovereign wealth fund Temasek Holdings. State Grid, whose annual revenue is around $300 billion, has offered to buy 60 per cent of SPIAA's unlisted utility firm Jemena's entire business for an undisclosed sum and 19.9 per cent of listed SP AusNet from Singapore Power for $824 million. Its unlisted asset - Jemena was formed as AlintaGas in 1995 and was listed on the Australian Stock Exchange in 2000.
State Grid Corp buys 60pc of Singapore Power's Australian assets.