Tas Greens wrong to back retail energy privatisation

Tasmanian Greens energy spokesperson Kim Booth.

The Tasmanian Greens have proposed the “biggest reform in the Tasmanian electricity sector since the dams were built", in its response to an expert panel that reviewed the state’s electricity industry earlier this year.

About 80% of the Tasmania’s electricity comes from hydro power, owned by Hydro Tasmania. This is sold to Aurora, the only retail company in the state. Another company, Transend, owns the distribution network. All three are government business enterprises.

The Electricity Supply Industry expert panel released its final report in March. It recommended big structural changes to the electricity sector that would leave Hydro Tasmania’s assets in public hands, but privatise the wholesale and retail sector.

The panel said the government should do away with Hydro Tasmania’s monopoly position, which means it can set power prices. In 2006, Tasmania was connected to the national electricity market through Basslink, opening up the possibility for national retail companies to operate in Tasmania.

But the panel said that as long as Hydro Tasmania sets the price, outside retailers would find it too risky to set up in the state.

The panel made four key proposals:

“1. The separation of Hydro Tasmania’s physical generation operations from its financial trading functions and the transfer of these trading functions to three specialised, independent state owned trading entities (referred to as ‘GenTraders’).

“2. The declaration of Full Retail Contestability, accompanied by the sale of Aurora Energy’s retail electricity business in three similar-sized parcels to bring new retailers to Tasmania.

“3. Combining Aurora Energy’s distribution business and Transend Networks into a single, state-owned network business; and

“4.The sale of the Tamar Valley Power Station.”

The Greens released its new energy policy on August 17. State Greens leader Nick McKim said: “The Greens’ position included support for full retail contestability, the establishing of wholesale trading rooms within Hydro Tasmania and retaining Hydro Tasmania and the Tamar Valley Power Station in public ownership.”

Full retail contestability means that multiple companies will be able to compete to sell electricity. The Greens have backed the panel’s call to privatise Aurora’s retail arm.

The Greens rejected the panel’s proposal to create the three GenTraders on the grounds it could open the way for Hydro Tasmania’s privatisation. Instead, it proposed the creation of three separate trading rooms, which will bid for wholesale electricity from Hydro and then resell it to retail companies.

Rather than sell the gas-fired Tamar Valley Power Station, the Greens say it should be transferred into Hydro Tasmania’s hands and retired by 2017.

With the impact of climate change and the carbon price, and with household power bills forecast to rise, the Liberals, Labor and Greens are engaged in an intense debate about energy. In an attempt to position themselves as a party that can “govern responsibly”, the Tasmanian Greens have backed neoliberal policies that take for granted that the market will lead to more efficiency and cheaper prices.

State Greens energy spokesperson Kim Booth said on August 17: “The Greens’ position represents a fundamental shift in the way power prices are set in Tasmania, moving from a regulated model to a market-based model delivering greater competition at both the retail and wholesale levels.

“It could come as a surprise to some people that the Greens have the most pro-competition energy policy of all three political parties, but for us it’s about finding solutions based on sound evidence not political expedience.”

Although the Greens deny that their policy supports privatisation, there is no other way to describe their support for selling off the rights to trade and sell the state’s electricity. There is no evidence that more competition in the wholesale and retail sectors will lead to lower energy bills for households.

In its submission to the expert panel, the Tasmanian Council of Social Services said it “remains sceptical regarding the potential benefits of competition for the majority of residential customers in Tasmania. Evidence from other jurisdictions indicates that electricity prices continue to rise — and remain comparable to Tasmanian prices — in spite of quite well-established competition in many markets.”

Privatising the retail energy sector won’t help achieve the Greens’ goal of 100% renewable energy or greater energy efficiency — for which public control over energy is essential. In the context of Prime Minister Julia Gillard’s encouragement for states to privatise their electricity distribution, any partial privatisation of Tasmania’s electricity industry today will be used as a reason to move towards full privatisation later.

The alternative is to keep Hydro Tasmania, Transend and Aurora in public hands and use the profit it generates to invest in new renewable energy, energy efficiency measures and subsidise low-income households.