Turnbull’s Energy Economics

In The Australian yesterday came this story of Malcolm Turnbull giving Einstein (or whoever really came up with his insanity quote) the middle digit:

Power firms told to cut prices

The nation’s electricity industry chiefs will be hauled in by Malcolm Turnbull for the second time in three weeks following an audit that rcevealed more than a million households are still paying the highest price rates ­imposed by energy retailers.

With the government seeking to regain the political initiative this week by switching the focus back to a key cost-of-living issue, the Prime Minister will ramp up pressure on the eight biggest electricity retailers to ensure all households are offered access to cheaper pricing deals.

The Australian has learned that an audit by the Australian Competition & Consumer Commission, provided to the government, has estimated that roughly one million households, or more than 10 per cent of all dwellings, were locked into the highest electricity rates, which were often up to 27 per cent more than the average cheaper plans.

In a meeting scheduled for Wednesday in Sydney, Mr Turnbull will require them to outline how they will help more families get on to a better deal and what measures they have put in place to make it easier for customers to switch providers.

Talk about yelling at a broken leg to heal quicker.

If this is the best Turnbull and his team can come up with to regain their lost votes, then they’re well and truly finished… and we won’t be far behind.

Without showing even the slightest understanding of why Australia’s electricity market is the way it is, Turnbull also announced that he is set to continue with his plan to quite literally push dung up a hill:

In an attempt to reset the ­agenda and break free from the political crisis surrounding the government over citizenship, Mr Turnbull will today return to the Snowy Hydro Scheme where he will announce the fast-tracking of a $29 million feasibility study* for the $2 billion Snowy 2.0 scheme to expand pumped hydro by 50 per cent and provide an extra 2000 megawatts of power to the National Electricity Market.

The scheme, announced in March, is expected to create about 4500 jobs.

[TMR: You hear that people of the LaTrobe Valley – 4,500 jobs!!! Your prayers have been answered. Go get those jobs. Bling bling! ]

This is not a joke: Turnbull really wants to take energy out of the grid, pump it up a hill, watch less of it trickle back down:

Pumped hydro is a low-emissions way of creating electricity which can provide back-up for the National Electricity Market.

It’s unlikely to provide base-load power but it will help stabilise the grid as older coal-fired power stations are retired from the NEM and provide a back-up for intermittent renewable energy such as wind and solar.

[TMR: I love it how something can ‘create electricity’ but not produce any base-load power – wheeeeee!]

… and then complain with a straight face when the price of electricity goes up.

To put this in perspective, consider which of the following options would make you more angry:

  • Turnbull comes up to you, takes $100 out of your wallet, sets it on fire in front of you and walks off laughing.
  • Turnbull takes the same amount of money from you for the sole purpose of taking energy out of the grid.

The answer, of course, is that the second option should make you a lot more angry – because at least the first option would result in a net energy gain and no upward effect on electricity prices (i.e. the exact opposite to the first option).

Now, I know this may sound like a trick question, but try to take a guess at what might happen if you encourage energy producers to produce expensive and unreliable energy?

How about I give you and Malcolm some thinking time…

1459480155213

That’s right!

They’ll produce expensive and unreliable energy and charge consumers for the privilege:

real-electricity-prices-

 

How many more examples like Tasmania and South Australia are we going to need to see before the penny drops?

Lastly, I’m also starting to suspect that Turnbull hasn’t heard of the bell-shaped curve. Just what percentage of households does he think should be paying the highest rate for electricity? And, most critically, even if he could socialise our ‘energy market’ and get everybody on to the ‘cheapest rate’ – what does he think would happen to that ‘cheapest’ rate? (No, the answer isn’t: power companies will cheerfully take the hit because they believe in social contracts and justice).

And just how many of the 10% of households currently paying the highest rate for their electricity are actually doing it tough anyway? Does anybody know? Is anyone going to ask Turnbull and hold him to account?


(*) PS: do you reckon there’s a Snowys chance in hell that this $29 million ‘feasibility’ study – which has followed Turnbull’s $2 billion announcement (seriously, just stop and process that) – will say the bleeding obvious: that hydro electricity relies on a nuisance called gravity and can only work if you have enough rainfall to fill a dam?

It’s ok, I don’t think so either.

 

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8 thoughts on “Turnbull’s Energy Economics”

  1. No more coal fired power stations being built to help save the planet, although we export cheap coal to the rest of the world.
    Doesn’t make sense to me.

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    1. This is the biggest shame of the Adani mine. Yes, there’s good money in it – but just look at all that cheap energy that we’re not allowed to use.

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  2. I love the way in which the true believers in climate change, people like Turnbull, fell for the Flannery prediction that ‘even the rains that fall won’t fill our dams etc’, but now Malcolm wants to use the Snowy hydro scheme which relies on the dams being full or nearly so. In Tasmania, not content with the example set by South Australia’s ruinable renewables, the Premier has declared Tasmania aims to be solely renewable energy with zero emissions and the battery of the nation with its hydro system and pumped hydro.

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    1. Well put David. Amazing how dams are now suddenly ‘reliable’. To be fair, Tasmania deliberately ran its dams down when the carbon tax came in and kept flogging it off as fast as possible when it knew the tax would soon be abolished. Then came their drought to rub it all in.

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