admin /9 July, 2007
The exasperation expressed in late June by Richard Pratt’s Visy Group about the pace of reform in the New South Wales (NSW) electricity market was given substantial backing on 4 July by the Business Council of Australia(BCA), according to an editorial in The Australian Financial Review(5/7/2007, p. 62).
Identifying a grim situation: "The BCA submission to the inquiry into electricity supply headed by Tony Owen – itself a welcome step forward by the lemma government – laments the poor investment climate that has been allowed to develop, hindered by opaque and politically expedient distortions in the form of retail price caps and other constraints," reported the editorial.
Uncertainty pushes prices up: "The bottom line is that if business is to invest in muchneeded capacity for electricity generation, the price will be forced higher the longer uncertainty about the medium term operating environment remains. The BCA believes that disparity between states about potential greenhouse gas trading schemes is ‘contributing to a much higher risk premium on investment and uncertainty about the availability of future generation’".
In search of eco-friendly solutions: "If the energy industry is to address both rising demand and climate change – and some retailers are declaring their intention to meet strict C02 reduction targets – then in the decade before clean coal and potential nuclear baseload power become available, tough decisions are needed on baseload power, and gas will play an increased role in peaking supply," stated the editorial.
400 businesses deprived of gas supplies in NSW debacle : "Yet the debacle in NSW last week, when 400 major business users had their gas supplies throttled, at substantial cost, rather than allowing domestic users to feel the pinch, illustrates the politicised nature of the process. The gas supply industry and its infrastructure and ordering systems need as much attention as the suboptimal national electricity market. The states maintaining ownership are at fault, NSW in particular."
The pressure is on: "The Owen inquiry must address issues of transparency, " said the editorial. "A visible, open market will allow the most efficient – and, shortly, the least carbon-intensive per dollar – delivery of energy to the Australian economy to emerge. Business needs clear pricing signals this year to plan to meet the demands it will face in 2010, not just those of a decade away. The federal government must play its leadership role of ensuring the Council of Australian Governments’ rhetoric becomes reality."