Date: November 08 2012
So Victoria is the place to be when it comes to a model for energy markets.
The state government may have ditched that slogan a while back but it's one federal energy minister Martin Ferguson seems keen to revive when it comes to mapping the future of the country's power sector.
"Victoria in many respects has led the way," will be Mr Ferguson's verdict when he releases the long-delayed Energy White Paper outlining the future of the country's energy policies later today. "The willingness of other state Governments to take on these hard reforms will be essential," the minister will say in his lunchtime speech.
"It will take political courage where others have failed." Fighting words that are likely to offend some state governments – particularly Queensland and New South Wales – who reckon Canberra lacks some bravery itself.
While the detail of what the "hard reforms" might be won't be public until the full tome is released, there is enough information already available to raise some early doubts.
Last November, roughly at the time the government released its draft white paper, the Australian Energy Market Commission (AEMC) revealed some sobering estimates of where they think electricity retail prices will be in 2013-14 compared with 2011-12.
Nationally, the increase will be 12.1 per cent – painful but a fraction of what consumers have been slugged with in recent years. Interestingly, Victoria – which fully deregulated retail prices in 2009 – will see such prices leap 31.5 per cent, the AEMC estimated.
NSW and Queensland - "gold-plating" central when it comes to excessive investment in those poles and wires by their state-owned power companies – will see retail price increases of just 7.1 per cent and 8.4 per cent, respectively.
Victoria is clearly leading the way on that one. But just where is something of a guess. The AMEC's footnote to its table of price increases strikes this rather plaintive note: "In Victoria, the entire retail margin is included in the retail component and should be treated with caution given the absence of access to data and the fact that most customers are likely to be on market contracts rather than standing offers." That's a polite way of saying, we only know what the companies want to tell us.
And what might be causing such runaway retail price increases? Competition, oddly, appears to be driving costs up rather than down even as wholesale prices slide. Recent Victorian data suggest the annual churn of customers amounts to 28 per cent, and probably costs the retailers $200 for each client change. Think about that the next time you answer the door to someone hawking (on commission) the benefits of switching.
To be sure, the greater competition in Victoria has not been without it benefits. For one thing, there hasn't been as much unnecessarily investment in networks that is dogging northern neighbours.
The state is also the first to be rolling out so-called smart meters - allowing for information to flow both ways between retailers and consumers - that will lay the foundation for future efforts to reward energy users who flick off the switch during peak times of demand.
There will no doubt be other quirks and surprises once the finer detail is revealed, such as how heroic the coal export goals are now that China has started reducing its own production and underwriting a push to dominate global markets for renewable energy products from wind turbines, solar photovoltaic panels and much besides.
But here's one tidbit for amusement. Mr Ferguson's speech and the white paper apparently make no mention of nuclear power. He will, though, tout the release of a new website by CSIRO called "eFuture".
"The website allows the user to choose a range of variables and show how these impact on Australia's electricity costs, technology mix and carbon emissions, through to 2050," Mr Ferguson will say, according to a text of his speech.
Mr Ferguson might want to give the website a go. It has some 1000 scenarios, ranging from high or low demand, and a range of technologies, including carbon capture and storage, and yes, nuclear energy.
And while Mr Ferguson hopes to reach out across the political divide to secure backing for his energy reforms, the CSIRO webtool doesn't yet have an option to "turn off" a carbon price. That addition might be available for the next iteration, "if there's strong interest".
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