The Guardian January 23, 2002

Power privatisation:
Blackouts, price hikes, for smaller states

by Peter Mac

Households and industries in Victoria and South Australia are bracing for 
power failures as this year's peak annual demand coincides with plant 
breakdowns and crucial maintenance.

Victorian Shadow Treasurer Robert Clark has lashed out at the state's ALP 
Government for dragging the chain over construction of three new power 

However, as state Premier Steve Bracks pointed out, the previous Kennett 
Government was obsessively focused on the privatisation of the state's 
power generation system, and neglected altogether to plan for an expansion 
of the system to meet rapidly-increasing power demand.

Successive Australian state governments have taken steps to implement a 
privatisation agenda.

It is noteworthy, however, that the states who are most advanced in their 
plans to sell off their power-generation capacity, are suffering the worst 
effects of power shortages and cost blow-outs.

The situation has been exacerbated by the lack of an effective national 
power policy. The mass privatisation of state power-generation was hailed 
by the private sector as the means of delivering cheaper power alternatives 
to consumers by allowing them to change from one power authority to 
another, and to buy their power from suppliers in different states.

However, the results are revealing a different picture.

In NSW the ALP Government's Treasurer, Ted Eagen, was forced to back away 
from his own plans to privatise the state's electricity generation system 
after a humiliating roasting by power industry shop-floor delegates at an 
ALP State Conference some years ago, and the system remains state-owned.

NSW and Queensland are the only states that have spare generating capacity.

However, the facilities to transfer power across state boundaries have 
recently been criticised by experts for their relatively low capacity and 
their susceptibility to breakdowns during periods of peak demand.

And in states where alternative supplies have been introduced, consumers 
are getting a rude shock about the price of privatised electricity.

There'll be no cheap electricity for households in Victoria, for example, 
where an alternative supply became available two weeks ago.

Prior to the introduction of these new arrangements, the five regulated 
power suppliers in that state indicated that they would require an overall 
price increase.

The Bracks Government insisted that this be capped at 4.7 per cent, but in 
order to sweeten the pill for the suppliers, and to cushion suburban and 
regional consumers against the full price rises, he granted the suppliers a 
generous subsidy of $118 million.

And how did the new captains of the power industry distribute this 
largesse? They kept the average price rise to 4.7 per cent all right, but 
they charged tariff increases of between five per cent and a whopping 25.9 
percent to domestic consumers, and reduced the charges to business by eight 
or nine per cent!

As a representative of one company explained solemnly "We reviewed the 
current rates and we have adjusted them to more effectively represent the 
costs associated with servicing these customers."

So much for subsidised bills for households.

The companies are expected to offer some concessions to their customers by 
way of discounted movie tickets, video vouchers or fly-bys, but these will 
do little to compensate for the savage increases that Victorian households 
are expected to shoulder.

The final deficiency of the privatised power system is in its lack of 
concern for the environment.

Most power suppliers offer incentives for consumers to actually consume 
more energy, rather than less, in order to boost the company's profits.

For example, as the environmental organisation Energy Action Group (EAG) 
recently pointed out, the power supplier AGL offers no-deposit, interest-
free loans to purchasers of air conditioners, even though the critical peak 
energy demand has been magnified in recent years by widespread mid-summer 
use of air-conditioning.

The company offers no such subsidy for energy-efficient appliances and 

Indeed, this week news filtered out about one company's intention to 
construct a wood-burning power station in Sydney's western suburbs.

The proposed plant would burn not only sawmill residues but also old 
furniture, thereby releasing toxic gases into the atmosphere.

Meanwhile, good timber (including some from old-growth native timber 
forests) is being exported overseas en masse from some states to be 
converted to woodchip!

There is similar lack of concern at government level. Despite "lip-service" 
by state and federal governments about the looming crisis of global 
warming, there appears to be no serious long-term commitment to the use of 
non-polluting power generation utilising wind or solar power.

But the real culprit in all of this is not government. As the current power 
dilemma illustrates, the culprit is capital itself, and its insatiable 
drive for profit, to which our current crop of governments remain 
absolutely subservient.

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