Australian Politics – ACCC Backs Abbott: Help Build New Power Generator

Posted on Wed 07/11/2018 by

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By Andrew Bolt ~

Tony Abbott and the Nationals are right and Malcolm Turnbull wrong, judging by the Australian Competition & Consumer Commission’s report on electricity. Yes, government should subsidise or guarantee contracts to allow a new generator – probably coal – to be built:

The competition watchdog has called for radical reform of the ­National Electricity Market to bring down prices…

The Australian Competition & Consumer Commission … report found that the market it would be expected to operate in was broken and consumers faced an “unfair” and “misleading” system.

One of the key recommendations is for government to effectively underwrite the construction of new dispatchable power sources — either baseload coal or gas — by guaranteeing long-term contracts for large industrial and commercial users.

When Abbott suggested it, Turnbull ministers attacked him and hordes of journalists mocked him.

But now?

UPDATE

Remember this?

The treasurer, Scott Morrison, has smacked down a backbench push for the Turnbull government to back a new coal plant, arguing that high-efficiency coal does not mean cheap energy, and taxpayers would also be left on the hook.

And this:

Mr Turnbull also said he did not believe the government should build a new coal-fired power station

“There’s no need for the government to do that. You want the private sector to do that. I’m leader of the Liberal Party. You remember the Liberal Party, that’s the one that believes in free enterprise. It’s the Labor Party that wants to nationalise things and have the government do everything,” he said.

Then this from columnist Giles Parkinson?:

Former Australian Prime Minister Tony Abbott

Facing certain defeat in the next election, the hard right rump of the governing Coalition government (that’s more than half the party), are making a last ditch attempt to reverse the course of technology and have the government fund new coal-fired generators.

A newly-named “ginger group” known as the Monash Forum has burst from the bleechers to put the case for coal, arguing – despite all evidence to the contrary – that new coal-fired generation is the key to restoring low power prices.

And this, from Peter van Onselen:

Two peas in a pod: the Greens and the reactionary conservatives in the Liberal Party. Both called for more government intervention this week….

The Coalition delcons have formed an inappropriately named club, the Monash Forum, to push for a government-owned coal-fired power station. Fancy being so self-important as to name your group after a distinguished World War I general. Sir John Monash wasn’t even a sniper.

This group — essentially Tony Abbott, Eric Abetz and Kevin Andrews — is joined by a bunch of agrarian socialists (otherwise known as Nationals). It’s a case of the junior Coalition partner outnumbering the senior Coalition partner’s delcons in Monash’s uninspiring modern-day political army. No wonder the Monash family demanded the group stop using his name.

When you factor in the number of Nationals affiliated with the forum, the ideological link to the Greens becomes less surprising. Nationals often have pushed for government intervention, much to the irritation of true Liberals. Once upon a time true conservatives were as irritated by such positioning as liberals are.

Michelle Grattan chose to describe Abbott’s idea as one driven by revenge and ideology, not reason:

One Liberal moderate bluntly characterises the “Monash Forum”, which burst into the energy debate this week, as “the deplorables trying to give themselves a credible front”.

Whatever else it might be, the so-called forum is Tony Abbott’s latest weapon in baiting the Turnbull bear.

Coalition backbenchers who signed the forum’s letter, which calls for the government to construct a new coal-fired power station in the Latrobe Valley on the site of the now-closed Hazelwood, are driven by various motives – revenge against Malcolm Turnbull, an ideological commitment to coal, the desire to sharpen the differences with Labor, a passion for publicity.

What Abbott had actually been arguing for:

The now-federal-government-owned Snowy already runs gas-fired power plants as well as hydro ones, so there’s no reason why it couldn’t add to its thermal capacity by building some coal-fired plants to guarantee supply and to drive down price.

An alternative might be to go the market seeking the best bids for the provision of 2000 megawatts of 24/7 baseload power for the next 30 years, with the government bearing any carbon price risk.

But, one way or another, it will be up to the government – this federal government – to make sure that old coal fired power stays in the system and that new baseload power comes in to replace it.

UPDATE 2

The ACCC confirms global warming policies and things like the Paris agreement hurt Australians:

Policies associated with the objective of reducing carbon emissions have been problematic. Australia has committed, through international treaties, to reduce its carbon emissions. The electricity sector has, understandably, been a key focus for these efforts given the historically carbon-intensive nature of electricity generation. However, various policy failures here have hurt consumers.

As the Finkel review identified, there has been a failure to facilitate an orderly transition from carbon-intensive generation technologies to cleaner ones. This is highlighted by the relatively sudden decisions by the owners of the Northern and Hazelwood power stations to close those plants. The short notice of closure of these plants did not enable the market to respond to expected shortfalls in capacity with adequate and timely investment.

Intervene, says the ACCC:

For example, the investment case and ability to source funding for many new generation projects can be heavily reliant on having customer commitments to off take for up to 10–15 years. This is rarely possible for many businesses that can only commit to a shorter term of contract (for example, up to five years). It is likely that more projects could be undertaken, thereby providing additional sources of competition to existing wholesale competitors and directly helping businesses manage their electricity costs, if government support was provided for the ‘back end’ of suitable projects….

The Australian Government should operate a program under which it will enter into low fixed-price (for example, $45–50/MWh) energy off take agreements for the later years (say 6–15) of appropriate new generation projects which meet certain criteria. In doing so, project developers will be able to secure debt finance for projects where they do not have sufficient off take commitments from C&I customers for later years of projects. This will encourage new entry, promote competition and to enable C&I customers to access low-cost new generation.The program should operate for at least a four-year period, with support provided for qualifying projects. To qualify, a project proposal must:

  • have at least three customers who have committed to acquire energy from the project for at least the first five years of operation
  • not involve any existing retail or wholesale market participant with a significant market share (say a share of 10 per cent or more in any NEM region)
  • be of sufficient capacity to serve the needs of a number of large customers
  • be capable of providing a firm product so that it can meet the needs of C&I customers

Andrew Bolt writes for the Herald Sun, Daily Telegraph, and The Advertiser and runs Australia’s most-read political blog. On week nights he hosts The Bolt Report on Sky News at 7pm and his Macquarie Radio show at 8pm with Steve Price.

Read more excellent articles from Andrew Bolt’s Blog . http://blogs.news.com.au/heraldsun/andrewbolt/

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