Electricity prices were forecast to drop this month but now regulators are tipping higher-for-longer and blaming a ‘cold snap’. It would be nice to have an independent regulator, report Kim Wingerei and Michael West.
What’s the scam with electricity prices? They were forecast to drop by this month in line with falling wholesale prices, but now the regulators are talking about how they will be higher for longer thanks to the ‘cold snap’.
Three months ago, around the time energy experts were tipping wholesale electricity prices would peak in July this month, then be followed by relief for beleaguered consumers from the punishment of three years of nosebleed energy bills, we discovered the apparently bizarre gas forecasts published by AEMO (chart below).
The price of gas is key to the price of electricity. And high gas prices have crushed the consumption of gas, yet government and industry forecasters claim gas use will triple over the next 20 years.
This, even though recent data from the Australian Energy Market Operator AEMO shows gas consumption in Australia has plunged over the past five years and this year is tipped to be half the level it was in 2019. Falling demand, rising prices, que?
Source: AEMO Gas Statement of Opportunities
If privatisation of gas and electricity networks and the consequent complexity of the market are partly to blame, it is worth pondering whether a more independent regulator might be in order. We are talking about the Australian Energy Market Operator (AMEO), which independent energy expert Tim Buckley described this week as “captured by the methane gas cartel”.
Buckley, who runs Climate Energy Finance analysis group, had been debating this very point with with other industry experts at the Smart Energy Council conference in Sydney.
Indeed MWM and analyst Bruce Robertson have been criticising – correctly in retrospect – the foreign controlled gas cartel for the past decade in literally dozens of stories.
How fake gas frights and fanciful forecasts keep fossil fuels burning for longer
It is always a good starting place to look at who owns what, and AEMO is no exception. AEMO is a public company limited by guarantee, of which 40% of the members are from the energy industry and 60% from government; and the board of directors of AEMO is stacked with fossil fuel executives.
So, the input from the industry is certainly there, if not blatantly dominant. Why else would they be forecasting the use of gas to triple if not for advice from the likes of Woodside, Shell, Chevron, Origin and Exxon?
Too many call for royal commissions too often but in this case, surely given the price of energy is so key to Australia’s economic future and social wellbeing – and given the cartel dominance of foreign controlled fossil fuel producers in the gas sector, indeed in transmission too – a robust independent judicial inquiry is in order. It would like save the country a lot of money. And then there’s the planet, of course.
As Buckley pointed out in a LinkedIn post, the constant cries of “gas shortages even as East Australia produces five times the amount of gas we use domestically” are absurd. “Gas demand continues to decline in Australia because consumers and industry can’t afford to keep being gouged with prices five times the US domestic methane price.”
He referred to the executive appointment to the key AEMO Services role seven months ago. Although he said NSW desperately needed an electrification of everything expert, a disruptor with strong knowledge of AI and technology, instead we got an APA Group stalwart, Nevenka Codevelle.
Disruptive thinking and speed of decarbonisation is not going to be achieved if we continue to rely on the fossil fuel industry for the training of our future leaders.
APA group controls Australia’s gas pipelines or transmission sector in a duopoly with Singapore’s Jemana. And further to this thesis of captured regulators, the evidence is strong that the energy markets rules-setter Australian Energy Regulator (AER) is also captive to the gas industry. This is evidence in this coverage of the NT’s ‘white elephant’ pipeline lobbed on the public at great taxpayer expense.
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Gas transmission, like distribution and export parity pricing and the cartel of producers, is a problem.
The nuclear debate, believed by many political observers to be a Coalition tactical distraction to keep coal and gas burning for longer has been disruptive to the roll-out of solar and wind projects. Markets like certainty.
“We hear lots of excuses and numbers of new planning system approvals for NSW projects of State Significance, but the proof is in the pudding – we are simply not getting anywhere near the number of wind and solar projects approved and then to final investment decision and construction that we need. The best way to get energy prices down permanently in NSW and to stop the constant stream of coal subsidies is to commission new replacement capacity ahead of end-of-life unreliable coal clunker closures,” says Buckley.
The trick might be for NSW Premier Chris Minns to fix the planning department and shift away from the fossil fuel mindset. Federally says Buckley, Energy Minister Bowen ought to review the ownership structure of AEMO and “move to 100% public funding to focus on the Australian consumer and to align with our climate and energy security objectives”.
The incumbent fossil fuel industry is a problem, and delay merely plays into the hands of the fossil fuel types who hold so much sway over our regulators. As the two major parties receive a lot of funding from the fossil fuel sector and are therefore timid when it comes to policing the sector, a royal commission may just give them the bullets they need to go into battle for lower electricity prices.
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Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.