La­bor breaks duck on power

The West Australian - - OPINION -

In a clas­sic piece of po­lit­i­cal sleight-of-hand, the anti-pri­vati­sa­tion McGowan Gov­ern­ment has not only pri­va­tised parts of a pub­licly owned power util­ity’s as­sets but has put them in for­eign hands. La­bor boasts it won gov­ern­ment on the back of its prom­ise to stop the sale of any of Western Power to Aus­tralian in­vestors, but last week it sold off part of Syn­ergy to a European fund.

This was Mark McGowan’s po­si­tion in the fi­nal week of the elec­tion cam­paign: “Ev­ery­one knows that when you pri­va­tise State-owned util­i­ties, power prices go up, and ser­vices go down.”

But say­ing one thing and do­ing an­other is only part of the prob­lem here.

The Gov­ern­ment’s an­nounce­ment of the Syn­ergy deal nei­ther ad­mit­ted it was an ef­fec­tive sale — in­stead call­ing it an in­vest­ment — and re­ferred only to “a joint ven­ture with a pri­vate sec­tor in­vestor” when the re­al­ity is that it handed tax­payer as­sets to a for­eign owner.

Once again it is nec­es­sary to make the point: a party that cam­paigned long and hard in Op­po­si­tion about trans­parency and open gov­ern­ment falls way short of the mark when it gets into power.

And miss­ing from the sparse amount of in­for­ma­tion made pub­lic is the ef­fect this ex­pan­sion of Syn­ergy’s re­liance on re­new­able en­ergy will have on WA’s power prices.

Any gov­ern­ment con­fi­dent that a new en­ergy pol­icy takes the pres­sure off one of its hottest po­lit­i­cal prob­lems would be shout­ing it from the rooftops.

Trea­surer and En­ergy Min­is­ter Ben Wy­att was silent on that im­por­tant mat­ter when he fi­nally put out a me­dia state­ment last Thurs­day af­ter the story broke in this news­pa­per’s business pages the day be­fore.

And when he was given the op­por­tu­nity dur­ing ques­tion time in the Leg­isla­tive As­sem­bly to say that the sale would not force up power prices, he de­clined to take it.

Wy­att’s of­fi­cial state­ment was more note­wor­thy for what it didn’t say than for any de­tails it gave the pub­lic.

He didn’t name the “pri­vate sec­tor in­vestor” as the Dutch In­fra­struc­ture Fund which has been hoover­ing up re­new­able as­sets all over Aus­tralia to cash in on gov­ern­ment sub­si­dies.

The state­ment didn’t say DIF would own 80 per cent of the as­sets and Syn­ergy only 20 per cent.

And he didn’t re­veal that Syn­ergy’s ex­ist­ing Al­bany and Gras­mere wind farms and all the as­sets of the War­radarge project near Ene­abba — all pub­licly owned — would be trans­ferred into the new part­ner­ship as its eq­uity, which is what con­firms it as a sale.

If it’s such a great deal for WA, why was the Gov­ern­ment so tricky with the an­nounce­ment which, apart from this news­pa­per, con­se­quently re­ceived lim­ited news cov­er­age and very lit­tle scru­tiny?

When McGowan was con­fronted in the As­sem­bly last Thurs­day with his pre-elec­tion op­po­si­tion to sell­ing any part of an en­ergy util­ity to Aus­tralian su­per­an­nu­a­tion funds, he blus­tered.

“Western Power and the pro­vi­sion of elec­tric­ity through poles and wires is a nat­u­ral mo­nop­oly and we did not sup­port the sale of a nat­u­ral mo­nop­oly,” McGowan said.

That is sim­ply a ca­nard. As a re­port in En­ergy Source and Dis­tri­bu­tion mag­a­zine said about the Bar­nett gov­ern­ment’s sales plans:

“Western Power is a reg­u­lated mo­nop­oly, which means a num­ber of in­de­pen­dent reg­u­la­tors will con­tinue to over­see the var­i­ous parts of the business, in­clud­ing safety, re­li­a­bil­ity, prices and per­for­mance.”

And La­bor has pre­vi­ous ex­pe­ri­ence in break­ing up en­ergy mo­nop­o­lies — although not very suc­cess­fully.

Also, the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion has stated that any prob­lem with poles and wires pri­vati­sa­tions on the east coast has not been the sell­ing, but the lack of ad­e­quate reg­u­la­tion by the gov­ern­ments that over­saw them.

Reg­u­la­tion and tax­a­tion are nat­u­ral ac­tiv­i­ties of gov­ern­ment. Gov­ern­ments crowd­ing out com­mer­cial en­ter­prises by com­pet­ing with them is not.

The “nat­u­ral mo­nop­oly” ar­gu­ment is a left-wing myth pop­u­lar with the sort of Marx­ist econ­o­mists who write for The Con­ver­sa­tion. It again shows how far La­bor has drifted from the sen­si­ble poli­cies of the Hawke-Keat­ing years.

In­ter­est­ingly, when Wy­att — an econ­o­mist — was con­fronted in ques­tion time by Ger­ald­ton Lib­eral MLA Ian Blayney with the Premier’s pre-elec­tion aver­sion to sell­ing bits of the en­ergy util­i­ties, he chose not to quack like a duck about mo­nop­o­lies.

While pri­vati­sa­tion of as­sets like these makes eco­nomic sense and the Gov­ern­ment un­der­stand­ably wants to fi­nance ex-Bud­get the re­new­able ca­pac­ity it needs to meet the 2020 national tar­get, the way it was done is un­ac­cept­ably ob­scure.

The reper­cus­sions are un­clear for Syn­ergy’s en­ergy cus­tomers and the grow­ing re­new­ables in­dus­try which is now bat­tling an even big­ger gov­ern­ment-backed com­peti­tor.

Syn­ergy chief ex­ec­u­tive Ja­son Wa­ters told an es­ti­mates com­mit­tee hear­ing in Septem­ber that the business would re­tire 380MW of old gen­er­at­ing ca­pac­ity within a year and will add about 250MW of re­new­ables by 2020.

So I asked if this would lead to more ex­pen­sive power caused by the for­mer be­ing cheaper to pro­duce than the lat­ter.

Wa­ters said meet­ing the 2020 tar­get would be done “with least im­pact on the State Bud­get and at the low­est cost to con­sumers”.

“The cur­rent tar­iff cost re­flec­tive path, as de­ter­mined by the State Gov­ern­ment through the Pub­lic Util­i­ties Of­fice and the an­nual State Bud­get process, does in­clude the costs associated with Syn­ergy meet­ing the 2020 re­new­able en­ergy tar­get,” Wa­ters said.

“On this ba­sis, no tar­iff in­creases be­yond those cur­rently fore­cast in the for­ward es­ti­mates will be nec­es­sary as a re­sult of Syn­ergy’s re­new­ables strat­egy.”

And what about even more wind power un­bal­anc­ing the South West grid as had been prob­lem­atic with the Coll­gar plant near Merredin?

“Syn­ergy has, and will al­ways re­main mind­ful of the re­quire­ment to bal­ance gen­er­a­tion on the SWIS (South West In­ter­con­nected Sys­tem) by util­is­ing its fleet of gas-fired as­sets and is best placed to en­sure new re­new­able gen­er­a­tion build is un­der­taken re­spon­si­bly with over­sight of the best mix of gen­er­a­tion re­quired on the sys­tem,” he said.

At least it’s now on the record for fu­ture ref­er­ence. And now that McGowan has bro­ken his duck on pri­vati­sa­tion, who knows what will hap­pen to Western Power when WA’s debt cri­sis wors­ens next year?

Illustration: Don Lind­say

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