The Guardian 15 February, 2006
National Electricity Market:
Worse to come?
Bob Briton
Last week's COAG summit between state Premiers and the PM was most noted for the
proposed health system patch-up and the blue language of some of the participants. Less
widely reported was the concern expressed about the embarrassing shortcomings of the
National Energy Market (NEM), which so far includes the interconnected electricity grids of
the eastern states and South Australia. Far from providing a simple means to share around
generating capacity at times of peak demand, the mostly transnational-owned network is
the source of endless debates about why the scheme is failing to meet the people's need for
reliable, moderately-priced electricity.
The state governments involved are due to meet at a Ministerial Council on Energy in Darwin next
month to tackle the issues. Pressure is mounting from industry sectors wanting more opportunities
to make more profits from the transmission lines interconnecting the various states. Up until now,
the Australian Energy Regulator Steve Edwell has applied a rule that demands that proposals for
new interconnectors must show more economic benefit than other solutions, such as local
generation.
The worry has been that the owners of the interstate transmission lines will continue to use their
stronger than usual monopoly position to gouge huge profits out of the system and put prices
further out of the reach of disgruntled consumers.
Recent high temperatures in NSW saw the price of wholesale power soar from $40 to the current
capped price of $10,000 per megawatt hour. Electricity generating players in the NEM are still
pushing for the price cap to be abolished but, for the moment, are being held at bay. The
transmission monopolies have broken through, however, getting agreement for a test case 200
megawatt upgrade of the interconnector between Queensland and NSW.
Only Pollyanna would believe that a freer hand for NEM operators would solve the networks
multiple failures. South Australia is the proof of its flawed assumptions that a "freer" market open to
all comers will meet the people's needs. Since the breaking up and privatisation of the ETSA public
electricity utility in 1998, the shaky privately-owned system has never been out of the news for
long. Last month's widespread blackouts sparked renewed anger at the former Liberal
Government's treacherous decision to sell off the network.
ETSA is now in charge of local distribution networks and is 51 percent owned by Hong Kong-based
Cheung Kong Infrastructure and Hong Kong Electrics while the other 49 per cent belongs to Spark
Infrastructure — an investment consortium of various Hong Kong and German finance
capital.
The heatwave led to 63,000 households being blacked out. Most had their electricity restored in
three hours but many waited upwards of 12 hours. At least 1,000 were without electricity for 20
hours. Many of the 35,000 customers that rang up to complain had to wait 2½ hours for some sort
of response from ETSA's call centre which is now located in Bendigo, Victoria. Only 7,210 were
answered by an operator, most were dealt with by computer and over 8,000 just hung
up.
Apparently, 281 transformer fuses popped during the worst of the blackouts and ETSA was simply
not up to the challenge of repairing them. The corporation took out a full-page ad in the daily
newspaper to apologise to the community and began distributing small amounts of compensation
to householders. However, ETSA refused to give The Advertiser a full list of households
affected by the outages or how long they were without power. It seems a cash injection from the
state government of $750 million to ETSA over five years has not seen private electricity
distribution get over its problems.
Infrastructure Minister Pat Conlon has described ETSA's response to the emergency as a "dog's
breakfast" and has called for an inquiry into whether it has breached its obligations to maintain the
network. Like the Ministerial Council on Energy soon to be held in Darwin, it is unlikely that the
inquiry will come down in favour of the only measure that will restore reliable, moderately priced
electricity in future — the restoration of full public ownership.