Switch off Rees's 'new' electricity plan


Morris Iemma and Michael Costa crashed out of NSW politics because they tried to ignore overwhelming public opposition to electricity privatisation.

However, new Premier Nathan Rees's plan for electricity "reform" demands that opposition to continue.

Rees's scheme pretends to be different. But it contains much of the Iemma-Costa approach and leaves the door open to an electricity sell-off by stealth — without a vote in parliament and the embarrassment of Labor's own MPs blocking the sell-off.

The fact that Rees won the support of the NSW ALP machine on October 31 and the November 1 Country Labor Conference in Port Macquarie doesn't change this.

As United Services Union (USU) general secretary Ben Kruse put it: "More than 85 per cent of NSW voters believe electricity is an essential service that should remain in public hands. Selling off the retailers will do little to solve this state's economic problems and will only increase energy costs for struggling working families."

Rees's "reform" would not only privatise retailers Energy Australia, Integral Energy and Country Energy, it would lease the right to sell electricity on the wholesale National Electricity Market.

Current power generators would remain in public hands, as would transmission and distribution. But sites earmarked for future generation needs would be sold off and electricity wholesalers would have the right to build new power plants.

AGL and Origin are to be enticed into constructing new generating capacity by leasing them wholesale electricity trading rights.

The gambit sets up the state-owned generators to provide an increasingly smaller portion of electricity supply and, as private generating capacity expands, to be run down and phased out.

Rees's plan shares the Iemma-Costa view that public energy is inherently more inefficient than private.

However, there are no guarantees that privately-owned electricity corporations will rush to invest in electricity trading if they have no control over generation. This market is very volatile, and wholesalers are subject to enormous penalties if supply fails.

The government is seeking to wash its hands of the risks, but the energy corporations are going to need some very big carrots to assume them.

One likely carrot would be the right for the wholesalers to buy their electricity from any generator, public or private, elsewhere on the national grid. Another would be an agreement that the government would seek higher retail electricity prices from the Independent Pricing and Regulatory Tribunal of NSW while these still remain regulated (until 2013).

A third would be to allow the same energy corporation to buy retailers and lease trading rights — "vertical integration" — which will lead to a private monopoly and higher prices.

The details of the whole package have yet to be worked out. But, if the government looks like falling short of its targets of $10 billion for the lease of wholesale trading rights for 10 years and $3 billion for the retailers, such extra enticements are certain.

Environment, workers lose

The environment, workers and consumers stand to lose out under the Rees scheme.

Wholesalers, free to buy from the cheapest generators, would not be interested in investing in renewable energy until costs are lower. Existing coal-fired plants would be phased out more slowly, mandatory renewable energy targets (already far too low) would be restricted, and new private energy generation capacity would more likely to be coal- or gas-fired.

Rees's plan also says nothing about reducing electricity demand, which state and federal reports have estimated could be rapidly reduced by 30%.

Workers in the energy retailers on individual contracts (AWAs) will have their conditions guaranteed for as long as the contract runs. For those on awards, the government has promised to maintain guaranteed employment "to the maximum extent possible for the five year period".

All workers are to be given a guarantee of public sector jobs, or a $30,000 lump sum to switch to the private sector.

For a government looking to slash public sector jobs, these guarantees are suspect. Award-waged workers will face pressure to accept the cuts and workers on AWAs could find themselves out of a job at the end of their contract.

Any new power stations built by private energy corporations would become greenfield sites, open to new employment conditions and placing pressure on the conditions of workers in the remaining state plants.

Price fluctuations — particularly in peak periods — in a privatised electricity sector would be passed on to the consumer. Reliability would suffer under cost-cutting pressures.

While the government has said it will adopt a policy of reducing hardship for pensioners and the poor, the details are yet to be announced.

All this for $13 billion over the next 10 years, with a decreasing amount after that especially if private corporations generate their own electricity. The impact of the financial meltdown and carbon taxes mean the government's take will likely be much smaller. Compare this to the $1.5 billion NSW gets each year from its state-owned generators and retailers.

Rotten deal

This new plan is the result of a deal between the NSW ALP party machine, horrified by the 20% swings against it in recent by-elections, and the Rees government.

While the exact nature of this betrayal remains murky, it's telling that Bernie Riordan, NSW ALP president and NSW Electrical Trades Union secretary, has been silent — as has former Unions NSW "Stop the Sell-Off!" secretary-turned-MLC John Robertson and new NSW ALP secretary Matt Thistlethwaite.

It would seem that, to make peace with Rees and give Labor a chance of winning in 2011, the ETU leadership (with its base in the power stations) has sold out the USU (with 2000 members in the retailers), and with them the rest of working people in NSW.

Significantly, the deal has not been put to any rank-and-file meeting of electricity workers, nor Unions NSW.

After this betrayal, supporters of a publicly-owned electricity system need to join with workers whose jobs are under threat from Rees's privatisation plans for the state lotteries, environmental waste services, Sydney Ferries and rail maintenance to defeat these regressive plans.

"Stop the sell-offs!" is still the slogan and a serious union campaign against privatisation remains a burning necessity.

[Liam Mitchell is active in Blue Mountains People Power group. Dick Nichols is the national coordinator of the Socialist Alliance.]