2015-08-06
Mr BARBER (Northern Metropolitan) — The Greens are supporting this bill. It is nice that the government is making a few changes to its website to allow people to learn a little bit more about their energy bills, but if the government thinks that slightly enhancing the transparency of the electricity retail market is what is going to save us, it is sadly mistaken. There are deep and fundamental market failures going on in the energy market, which Labor somehow does not seem to want to address, despite the fact that this is basically the legacy of former Premier Jeff Kennett's mad scientist experiment in breaking up the energy market into horizontal segments that he somehow thought would introduce competition.
In fact it is the natural monopoly section of that market — the electricity grid itself — that is in most desperate need of reform, and yet that is where the incumbents seem to be most successful in resisting any reform. If you cannot get the grid working right, the generators attached to it, the retailers who provide electricity through it and all the other aspects of the operation of this market will fall in a screaming heap. That is where we find ourselves right now. We have a rapidly re-monopolising gentailer phenomenon, with effectively the three big retailers controlling most of the electricity market.
Notwithstanding the amount of churn that goes on between electricity retailers, as Mr Drum alluded to, the fact is the retail component of our electricity bill has continued to rocket in Victoria, and that is why our electricity prices are so high. Starting from that particular point of the question, what has that led to? It has led to consumers getting smart, reducing their energy use and going solar to avoid having to buy electricity. That in turn has led retailers and other market participants to try to throw up more barriers to energy independence.
Last year we saw one retailer try to put a special charge on customers who had their own solar panels as a punishment, if you like, or in some ways a tax on the sun, and when that was knocked off we saw other sorts of barriers being thrown up.
I have received a litany of complaints from householders and businesses, particularly rural businesses, who have tried to go solar to zero out their electricity bill and have been told by the local power distributor that they are either going to have the system downsized or in some cases completely refused. The response to that of course is to ultimately go off the grid. CSIRO is even modelling scenarios where a third of households in built-up areas may ultimately disconnect from the grid. That means a smaller pool of electrons will be moving through that grid, which means that the grid operator will need to charge even more to recover the fixed costs of operating the grid, and so on and so forth until we get into what in the US in similar circumstances has been dubbed the electricity death spiral.
Then you throw in the issue of climate change and the impact that is having. There will never be another coal-fired power station built in Victoria. There is simply too much uncertainty in the market to ever allow that to happen, and in some ways the certainty that there will be an increasing impost on polluters simply makes it impossible to make a coal-fired power station stack up economically. Now that gas is linked to the international gas price we are seeing the wholesale price on its way to doubling, which may lead to a 30 per cent increase in the average household bill. For now what it means is that gas-fired power stations cannot compete against coal-fired power. They are better off selling the gas for export to Japan.
With another drought around the corner, it will mean less water available to run coal-fired power stations and less water in hydro dams which provide an important peak electricity demand buffer. There is also the fact that renewables keep getting cheaper and that household energy efficiency continues to improve. In fact if you wanted to heat your home today, you would be better off installing an efficient electricity heater rather than the gas appliance, which in the past we thought of as green and cheap but we now know is not green and is going to be an increasingly expensive way to heat your home.
I could go off onto a further discussion about the impact of unconventional gas exploration, but that is probably stretching it a bit far. In any case I will have many more opportunities soon to debate what we should be looking at in terms of our future energy needs. Suffice to say I read a very interesting submission from the government last night on the subject of unconventional gas in which it is stated that expansion of commercial gas in Victoria will have no impact on prices in Australia unless we can pump so much of it that we depress the international gas price. Good luck sustaining that argument!
[Speech was interrupted. Click here to view the full debate.]
Mr BARBER — That was one of the things that cheered me up when my eyes opened this morning, Mr Jennings.
[Speech was interrupted. Click here to view the full debate.]
Mr BARBER — Mr Jennings is inviting me to pre-empt that debate. We have an inquiry into that, and as I said, we will have many opportunities to sort through all that.
But that right there is the dilemma we are facing. Mr Kennett's experiment did not work, and yet there is zero willingness from this government to take on this fractured market and attempt to bring some common sense back into it — just a website with a few more comparison tools so consumers can shop around between energy companies.
In addressing that retail question, both the Labor and Liberal parties have put forward the rate of churn between energy providers by domestic customers as evidence that this is a highly competitive market. In fact those companies have chosen not to compete on price wherever they can avoid it. There have been sign-up bonuses of Coles Myer vouchers and there have been high-pressure tactics involving students and backpackers knocking on consumers' doors and telling them they are being ripped off. One electricity retailer was massively fined by the Australian Competition and Consumer Commission (ACCC) for misleading door-to-door sales techniques.
It would be fair to say that the big three electricity retailers have been systematically lying to their customers for many years about their electricity bills. Why would we trust these self-same companies to tell us how the electricity market should be reformed when they are rapidly remonopolising the market, with the ACCC seemingly powerless to prevent the agglomeration of big retailers buying up the big coal-fired generators and using even more market power? And not just market power within the market but political power to ensure that the market rules favour them at every stage.
It is not going to last very long. It is entirely possible that we might see not only widespread community-owned generation in addition to the 1.5 million power stations that we now have in Australia — those solar rooftops that are so common wherever you go — but also, I believe, eventually the break-up of the electricity grid back into some form of public ownership, or at the very least the regulation of that grid becoming so tight that it effectively becomes a management franchise by the current incumbents.
Perhaps I believe that because I live in Brunswick where once upon a time the Brunswick council ran the electricity grid in that area. In the 1980s a solar array and a small wind turbine at the Centre for Education and Research in Environmental Strategies, known as the CERES environmental park, in Brunswick was feeding green electrons into that local electricity grid. If you lived in Brunswick in the 1980s or early 1990s, you were some of the first people to be able to purchase green power generated locally because the council was the retailer and the distributor and the Alternative Technology Association was the generator. There are still a few rusty signs on power poles around my suburb that say 'Brunswick Electricity Supply', and I think there may be aspirations in that community to eventually get back some control over the electricity grid so we can manage it for public benefit, not as some sort of hokey half-private half-monopoly system like the one we now have in Australia, or at least in the south-eastern part that is connected to the Australian energy market.
Cost of living is a big concern in this state. There is little offered by this government in relation to cost of living by way of an election promise. Basically the government seems to want to bash up local councils and get councils to keep their rates down. If we want to get serious about the cost of living, particularly as it relates to electricity and gas — and now water because it takes a lot of energy to shift water around the state, never mind if you start making it from a desalination plant, and it takes a lot of water to make electricity if you are going to continue going down the path of the coal-fired model — the Australia Institute, for example, has said that the real reason energy prices have been increasing is the bad planning of the system, particularly overinvestment in poles and wires which are now becoming redundant as more and more people become both generators and users of electricity.
If the government wants to see a sustained improvement in the affordability of electricity, it is going to need to cut the Gordian knot and it is going to need to make some major root-and-branch reforms to the way electricity is produced, distributed and sold here in Victoria. However, if this bill is a measure of the government's political will, unfortunately I think it is not up to the job.