NSW electricity: Privatisation by attrition

Peter Mac

The Carr Government is at it again. Seven years ago they tried to 
privatise the NSW electricity system but were defeated by an 
angry union movement. They now want to achieve the same thing by 
"nibbling around the edges", i.e. by reducing their involvement 
in the trading of electricity and selling off most of the billing 
operations. After that they would only retain a small billing 
service and the actual generation of power as a government-owned 
operation.

And make no mistake; they're still intent on eventually 
privatising electricity generation as well!

The result of the latest plan could be the loss of up to 500 jobs 
at the state-owned Energy Australia and Integral Energy. It would 
almost certainly also mean price hikes for electricity consumers, 
despite all the hype about increased competition.

One industry consultant pointed out that if the NSW Government 
were to sell off its trading and billing operations to a firm 
that is already operating in this field (which is highly likely) 
there would actually be a fall in the level of competition.

Under the plan, a number of firms would bid for the right to 
trade electricity from the existing government-owned generators, 
while four private firms would manage the accounts of some 70 
percent of the state's electricity consumers.

Several years ago the NSW Government split up its power 
generation, trading and billing operations into three separate 
government owned organisations. This, it was argued, would 
increase competition and so benefit electricity consumers.

However, the fact that the government's primary objective is 
privatisation at any cost, rather than any benefit for the 
consumer, is demonstrated by the government's willingness to have 
the same firms tender for both the billing and the trading 
operations, regardless of any impact this might have on 
competition.

And what about the remaining power generating facilities that are 
to stay in the hands of the state? The Carr Government made it 
crystal clear seven years ago that they wished to turn these 
facilities over to the private sector as well. This is in accord 
with the wishes of the Howard Federal Government, which put 
pressure on NSW to break up and privatise the major power 
generating facilities.

Carr failed to do this because of strong opposition within the 
ALP and from trade unions.

Their new plan allows for the private sector to submit bids for 
the construction of privately owned generating facilities, as 
well as for the billing and trading operations.

Private firms are reluctant to do this at the moment, claiming 
that there are not sufficient profits to be made in the National 
Electricity Market. However, the Howard Government came to the 
rescue late last month with new legislation intended to encourage 
the private sector to enter the power generation business.

If this assistance has the desired effect, the NSW Government 
will pursue the longer-term strategy of deliberately not 
replacing the existing state-owned generating facilities with new 
ones as they age and become redundant. This will eventually leave 
the privately-owned facilities as the sole generating capability 
in the state. You might call it privatisation by attrition.

A spokesman for the Australian Services Union, Paul Marzato 
commented: "It really looks to us as being another way of 
privatising. The issue is that jobs will go from NSW".

And of course it won't only be jobs that will go. Yet another 
crucial element of daily life will be relegated to the tender 
mercies of the private sector if the privatisers at state and 
federal levels are not replaced with pro-people forces.