Contributed by Ben Wilson
What is the difference? According to government spin, it is a means to guarantee lower electricity prices to consumers. By implication, the old scheme is being made to look like it has been the cause of the rapidly increasing cost burden of recent years.
The fallacy of this line of argument is that it grossly misrepresents what really drives electricity prices.
The government’s argument goes like this. Because power suppliers have been focusing away from more efficient sources and not producing enough energy, the constant base load is too low and this is forcing retailers to buy more expensive electricity off the grid.
The logic is that there needs to be more reliance on coal and gas, which keeps the price down. Wind, solar and hydro generated power are said to be less efficient and therefore should be downgraded and subsidies for them removed.
Never mind that it is all based on a falsehood.
Ignored is that the way the pricing system is set up, it provides a financial incentive for power generators to sell more peak period electricity and less off-peak period electricity. This is possible, because electricity can be stored and delivered to the home or business at any time. It is therefore more profitable to have a lower base load and top this off with peak peak electricity and pass the premium onto consumers onto consumers.
The NET is not going to change this.
Regardless, the new government scheme hangs on the promise of lower prices to the consumer and this is supposed to be brought about through the creation of a larger base load. It is not going to happen.
What it will have an impact on, is the generation of carbon emissions. Under the previous scheme, power companies were at least compelled to gradually increase the percentage of power that is generated by renewable technologies. This has now gone.
Malcolm Turnbull’s and Energy Minister Josh Frydenberg’s spin is that that there will still be an energy intensity calculation that will keep Australia on track to meet the existing Paris agreement in reducing the level of emissions.
Emissions will now be regulated by the Australian Energy Regulator (AER). But the regulator’s brief is not to control emissions, but to regulate the industry in terms of business operations. In any case, it means nothing when no emissions target has been set. An “intensity calculation” is supposed to be used. But no one really knows what this is.
What has been said, is that there will be greater reliance on allowing the market and self-regulation to decide.
No wonder that former prime Minister Tony Abbott has declared the new policy a victory for his line of argument.
The NET makes the government a target to be accused of pandering to the coal industry, which happens to be a prominent financial backer of both the Liberal and National parties.
It certainly looks this way when coal and gas based generation are suddenly called more efficient and renewables like wind, solar and hydro are said to be less efficient “lower emission technologies,” which should no longer be subsidised and supported.
In addition, energy retailers will be compelled to use a certain percentage from the preferred sources in each state.
For Malcolm Turnbull, this is a capitulation from his previous position and has the hallmark of another defeat at the hands of his rivals and may signal their growing strength within the party room and Turnbull’s growing isolation.
South Australian Premier Jay Weatherill denounced the plan as a “complete victory for the coal industry”.
Queensland’s Energy Minister Mark Bailey demanded the Federal Government explain how this plan would affect his State Government’s renewable energy target of 50 per cent by 2030.
John Grimes from the Australian Solar Council is threatening to run a multi-million-dollar campaign against the Turnbull Government over the plan.