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Power policy turns up heat on NT fracking

Power policy turns heat up on NT fracking pressures.
Power policy turns heat up on NT fracking pressures. Petmal

TUESDAY, October 17 may well go down in history as the day Australia turned its back on renewable energy by dumping a proposed Clean Energy Target (CET) in favour of a policy it calls National Energy Guarantee (NEG). For the Northern Territory, the move has the potential to fuel further pressure on the NT government to let go its politically fragile hold on a fracking moratorium and exploit gas reserves.

Australian householders are all too aware that power prices have risen in recent years.

But we now have a figure to put on that rise: 63% over inflation in the past decade, according to a report released this week by the Australian Competition and Consumer Commission.

No surprise to anyone struggling to pay their power bill each quarter.

A year ago, not long after South Australia weathered a tornado-led blackout in which 850,000 consumers lost supply, Federal Energy minister Josh Frydenburg vowed to do something about the whole messy business of power generation in Australia.

In partnership with the International Energy Agency, Mr Frydenburg announced an independent review into energy security and the electricity industry, to be led by Australia's chief scientist, Dr Alan Finkel.

Mr Frydenburg had the backing of state and territory energy ministers for the probe.

In a communique at the time, the cohort said that in light of the review and "the Australian government's commitment at Paris and the integration of climate and energy policy at the federal level, the blueprint will outline national policy, legislative, governance and rule changes required to maintain the security, reliability, affordability and sustainability of the national electricity market.” The review was launched in June this year and hailed a "blueprint for a world-class electricity system.” But today the Turnbull government has scrapped the Finkel review (at least in its current form), along with its commitment to renewable energy through a Clean Energy Target (CET).

The CET, a key Finkel recommendation and formerly part of the LNP's so-called "blueprint”, would have seen power providers required to produce a proportion of their electricity from low-emissions sources.

The CET certainly wasn't the best or only model for addressing carbon emissions, but it was all we had after successive governments steadily turned away from an Emissions Trading Scheme, first investigated by former Prime Minister John Howard in 2006.

In dumping the CEC, the government loses any chance for consensus on power policy with Labor and the Greens.

It also risks losing voter sentiment on climate change, which is undergoing a rapid recharge as the government's lack of action and inconsistent stance in this crucial arena threatens to put Australia even further behind international trading partners.

Nonetheless, this week's NEG policy is aimed squarely at voters' hip pockets, a gamble that price relief will snow-blind the Australian public on climate.

In fact, a 2017 survey of 2660 Australians revealed 73% want action on climate change and 93% want any future mix of power generation to be dominated by renewables.

If implemented, it is estimated the LNP's backward-looking NEG policy may cut household energy bills by between $100 and $115 per year.

At the same time, the policy will see an end to renewables subsidies by 2020, scrap the clean energy target, and refocus power planning toward affordability as well as reliability, this last by forcing retailers to buy a minimum of baseload power from coal, gas or hydro-power generation.

Minutes after the Coalition party room backed the NEG policy, the government released a video to facebook featuring Malcolm Turnbull spruiking the move as being to deliver "cheaper, more reliable electricity for Australian families and business.”

However, exactly what factors have led to Australia's current power generation blues remains unclear.

This week's report from the ACCC blames rising retail power prices on a significant increase in network costs, the cost of producing and distributing power and maintaining and replacing the equipment that does so.

Meanwhile, solar subsidy schemes come in for some not-unfounded criticism.

As stated on page 7 of the report: "... early adopters of solar PV were offered generous feed-in tariffs of up to 60 cents per kWh. These have been of direct benefit to recipients of the feed-in tariff (solar PV customers) but the costs of the schemes have been passed through to all electricity users.”

In the Northern Territory, a federal policy designed to destigmatise gas and coal will only rekindle federal pressure on Chief Minister Michael Gunner to back down on his government's moratorium on fracking and offer up NT gas to the east.

But the elephant in the room remains Australia's long-standing indecision on renewables policy.

Such indecision impacts electricity wholesalers and producers who must plan and place contracts well ahead in order to meet future power generation loads.

Research by the Grattan Institute reveals that electricity accounts for one-third of Australia's greenhouse gas emissions.

"Yet there is no credible policy to reduce emissions in the sector and enable Australia to meet its international climate change commitments,” the report states.

The report goes on to argue that without a nationwide climate plan, power bills will continue to rise.

The Australian Electricity Market Commission (AMEC) is reported as having advised government that power prices would come down once the market knows what the government's carbon policy might be.

The AMEC briefing suggests emissions reductions targets may still find a place in future policy, albeit through a back door.

Either way, the federal government's job is now to sell its plan to Labor and the Greens. Good luck with that.

Topics:  fracking glenn morrison heartbeat northern territory renewable energy


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