With less than a week before the Albanese government is due to reveal its “comprehensive plan for energy price relief”, the states might be satisfied with one that is merely comprehensible.
At their most recent gathering in October, energy ministers were told to expect an outline of the plan by 1 December.
They are set to meet again on 8 December, a day after the federal government now says it will reveal its solution to electricity bills forecast to rise 56% this financial year and next, and gas about 43%.
But, as one well-placed state official puts it, the commonwealth is still “flailing around in the dark”.
The South Australian, Queensland and New South Wales governments this week warned of the risks if the federal government seeks to impose caps on the price of gas and coal. Matt Kean, NSW’s energy minister and treasurer, told Nine radio on Thursday he had legal advice that the commonwealth could act to “fix coal and gas prices”.
Patience, though, is wearing thin that they will come up with a workable plan.
“They’ve spent two months consulting themselves and I’m worried that they’re only going to deliver an excuse,” Kean says.
Queensland’s premier, Annastacia Palaszczuk, on Tuesday said price caps could limit the ability of state-owned power plants to earn profits that, in turn, are used to compensate residents. “Hands off our generators,” was her blunt warning.
As one person inside a major power producer says, the Albanese government is learning how complex the energy system is, made up of a mix of private and public generators across multiple jurisdictions. Then there’s the east coast gas export industry, set up with minimal provisions to protect local consumers.
Palaszczuk’s rebuke, however, hinted at some of the clout governments could deploy if lowering energy prices is their primary goal.
Control over most state generators means they could – if they wanted to – bid in lower prices. This would result in smaller spoils to redirect to state residents (and the budget).
Similarly, the commonwealth wholly owns the biggest supplier of peak power in the national electricity market (Nem). As the latest quarterly report by the Australian energy market operator notes, hydro in NSW and Tasmania set wholesale spot prices 40% of the time – the most of any fuel source.
Much like governments could help lift wages because they’re big employers, so too could Queensland, Western Australia and the commonwealth shift market signals on power prices.
In Victoria, the prospect of the state playing an active role in the market is one reason that the resurrection of Victoria’s State Electricity Commission appealed to many voters – hence why the newly re-elected premier, Daniel Andrews, campaigned so often in an SEC jacket.
Premiers, rather than energy ministers, will be the point negotiators with the federal government. In Queensland’s case, that may be just as well, as its energy minister, Mick de Brenni, signalled support for all resources to be on the table, only for his boss to carve out coal-fired generators.
In NSW, coal is often sold on long-term contracts to power plants, in the order of $70 a tonne. However, it’s the 20% share sold on the spot market that exposes users to the record coal prices propelled higher in the wake of Russia’s invasion of Ukraine.
Instead of $100 a tonne, miners can ask for closer to $600, inviting a windfall tax or levy like the Queensland government has imposed, to the howls of the mining lobby group in that state.
With the NSW election in March, the public’s frustration with energy companies has the potential to grow support for a similar levy.
And in case anyone thinks next week will be the end of our energy woes, one of the country’s newest coal-fired power plants – Queensland’s Callide C – has quietly notified the market that a partial collapse of its cooling towers won’t be fixed until about mid-February, more than a month after it was supposed to be back online.
“That should cause some concern for some folks,” says Dylan McConnell, an energy expert at the University of NSW.
Add one more to the list.
