The recent blackouts and near blackouts experienced in South Australia and New South Wales have highlighted the growing insecurities experienced by our electricity network. While the causes of this insecurity vary depending on which side of the house chamber you sit on, many in the industry blame the lack of generation capacity and security on a lack of a cohesive federal electricity plan, a not unreasonable assessment given our recent political instabilities. This lack of long term strategy is apparent in the private ownership of our generation and transmission assets. One economist has proposed to return electricity generation to a state owned asset, an idea that may be one of the best solutions available.
For the first 100 years of electricity generation, the electricity grid and generation infrastructure was government owned and operated, ensuring security and stability. As explained by Professor John Quiggin, noted Economist and Professor at the University of Queensland, the privatisation of the network in the early 1990’s has been an unqualified failure, with network assets mismanaged as companies predictably remain concerned only with profit margins, neglect maintenance and have no interest in network security.
This was clearly demonstrated last week during the rolling blackouts experienced in South Australia, when the Pelican Point Gas Power plant and it’s additional 240MW of generation was not turned on to meet the demand. After investigation, it was discovered that owner ENGIE, also owners of the soon to be closed Hazelwood Power Plant, simply chose not to turn it on. Tasmania is currently staring down the barrel of a looming energy crisis, as low water flows mean their hydro electric power is becoming increasingly scarce and the Basslink Interconnector to Victoria, designed and built at great public expense for exactly such an occurrence as this, remains out of action due to business disputes with it’s Singapore-based owners. This complete lack of security in our generation network is why government intervention to re-nationalise electricity generation is so necessary.
Additionally, a helpful side effect of such a change would be a reduction in retail costs for the consumer, as removing the need for such assets so be profit able will lower overall costs which can then be passed on to the consumer. This would certainly please many consumers, as the price of electricity has been continuously rising for the past 5 years and rose 25% in the last 3 months in preparation for the closure of Hazelwood.
At any rate, with Coal Generation becoming increasingly unprofitable and investors unsure where the future lies, something must be done. Now.