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EXPERT REACTION: PM Turnbull pressures power companies to give Aussies a better deal

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With electricity bills climbing ever higher, PM Malcolm Turnbull met with power company bosses this morning to ask for a better deal for Australians. Energy Australia, Momentum Energy, Simply Energy, Alinta Energy, Origin Energy, AGL and Snowy Hydro are believed to have attended the meeting, together with peak body the Australian Energy Council. The PM suggested it should be easier for customers to compare and switch providers, and to find the best deal for them. Below, an Australian expert gives his view.

Organisation/s: Australian Science Media Centre

Expert Reaction

These comments have been collated by the Science Media Centre to provide a variety of expert perspectives and reflect independent opinion on this issue. Feel free to use these quotes in your stories. Views expressed are the personal opinions of the experts named. They do not represent the views of the SMC or any other organisation unless specifically stated.

Dr Ariel Liebman is Deputy Director of the Monash Energy Materials and Systems Institute (MEMSI) at Monash University

I welcome the PM’s announcement that energy retailers and the government have agreed to ensure that consumers will receive more information about their electricity prices or tariffs (especially about when discounts are about to expire) and that disadvantaged consumers will be protected. This shows that this is the first Australian federal government that has really seriously started to get to the bottom of the issues and drivers relating to electricity and gas prices and to try to do something about it. It’s not easy as most of the power in the space rests with the states.
 
However, this is but the minimum first step in starting to resolve the mess that is the Australian energy market framework, and on its own will not lower electricity prices. There is a chance it may not even prevent further price increases as retail electricity and price competition is not working at all. The following other steps should be undertaken as soon as possible:
 
1. Ensure that the ACCC [Australian Competition and Consumer Commission] gets to the bottom of why it seems to cost so much more to operate the retail function of an energy company in Australia than elsewhere, leading to large margins.

2. Provide the AEMC [Australian Energy Market Commission] and the AER [Australian Energy Regulator] with sufficient powers to tackle any competition issues in the retail space.

3. Fully privatise all energy assets across Australia, especially distribution networks, to ensure there are no perverse incentives due to state governments' conflicts of interest. In particular, electricity distribution networks which are responsible for the bulk of the electricity price increases in Australia over the past 10 years. Note that, under the federal constitution, the states have jurisdiction over essential services such as electricity. Hence the federal government regulator only operates at the consent of the states.

4. Review the entire network monopoly regulation process that was designed assuming no new technologies on the demand side such as solar PV, batteries or smart grids. Now that there is true competition from the customers themselves, the regulatory framework is locking out innovation and possible price reduction.

5. Implement as many of the emerging consumer-side IT technologies in consumer premises such as in-home displays or energy management systems to give consumers insight into their energy use and cost in real time.

6. Ensure policy certainty by getting a carbon price back on the table as quickly as possible. Or, failing that, implement the minimum policy, which is the clean energy target as recommended by the Finkel review, and ensure it has a low enough emission intensity and that the target matches the 1.5 degree target. This means much deeper cuts than the 26-28 per cent below 2005 by 2030.

7. Ensure that the coordinated generation and transmission system planning recommended in the Finkel review is implemented as soon as possible due to the long lead times for building wind and solar farms and transmission infrastructure. This function and power should rest fully with the Australian Energy Market Operator which should be given sufficient authority and resources to ensure this happens quickly and efficiently.

Last updated: 09 Aug 2017 3:03pm

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