Greens call to buy back the grid, in power play against ALP

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Australian Greens call on federal Labor to take a stance on ownership of the nation’s electricity grid, after unveiling a policy proposal that would seek to return it to public hands.

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The Australian Greens have called on federal Labor to take a stance on ownership of the nation’s electricity grid, after unveiling a policy proposal that would seek to return the largely privatised grid to public hands.

In a policy document released on Friday, the Greens propose transitioning the electricity grid back to public ownership, starting with the acquisition of the “vital” privately owned interconnectors – which connect the different regions of the NEM – by the Commonwealth.

The proposed policy would also seek to amend the rules of what the Greens say is a “broken market”, where even government-owned networks have passed exorbitant price increases onto consumers.

The proposal comes as privately owned energy network companies came under increased scrutiny this week, following power outages in the state of Victoria that were ultimately caused by faults on the networks of private poles and wires companies.

As tens of thousands of households were left without power during a southern heatwave, market watchers and consumer advocates wondered where all the money had gone to if it wasn’t spent on upgrading infrastructure to cope with the inevitable spikes in demand that each summer brings.

The policy also comes on the eve of what could be a crucial by-election for the ALP in the federal seat of Batman, in Melbourne’s north, after the resignation of Labor’s David Feeney on Thursday – the latest victim of the parliamentary dual citizenship saga.

The unexpected contest will pit Labor candidate Ged Kearney – who is Australian Council of Trade Unions president – against Greens candidate Alex Bhathal, who came close to beating Feeney at the last federal election.

As Guardian political editor Katharine Murphy has pointed out, the Batman by-election will be framed in Canberra as a test of Bill Shorten’s leadership – particularly on such hot-button issues as high electricity prices and the market mechanisms that are driving them.

Already, however, signs of factionalism are appearing, with the Electrical Trades Union quickly and publicly welcoming the Greens’ new policy, saying in a statement that the failure of NEM to deliver planned investment into reliable, affordable power supply had been felt by every household and business in Victoria and South Australia.

“This by-election, Labor needs to decide if they’re for privatisation or against it,” Greens MP Adam Bandt said on Friday.

“The current system is a rort designed by and for big corporations. Instead of using public funds to build our network more cheaply and efficiently, customers are forced to bankroll the profits of big
corporations, Cayman Islands companies and the investment arms of other governments.

“Big corporations front up to the regulator, ask for a 7 per cent return to build and maintain poles and wires when the government could do the job at 2.5 per cent and the regulator then ticks it off and makes consumers foot the bill,” Bandt said.

“Network companies are responsible for 97% of all blackouts, like the ones we just saw in Victoria, yet governments turn a blind eye and blame renewables instead.

“Standing up to Cayman Islands companies and putting the grid back in public hands will mean lower power bills. We will have a rationally planned network where investments are made in the public interest and to cut pollution, not in the interests of overseas shareholders and fossil fuel companies.”

Of course over-investment in, or “gold plating” of, grid infrastructure has not been the preserve of privately owned networks.

As market analyst Hugh Grant has noted here before, some of the worst offenders of over-spending n poles and wires have been the Queensland government owned networks, followed by NSW (when government owned).

But the Greens told RenewEconomy their solution was not just to “renationalise” the energy networks, but also to change the rules.

As the policy document puts it: “The first step will be to reduce the guaranteed rate of return offered to network companies to at or close to the government bond level.

“There can be no justification for making consumers subsidise essentially risk-free investment in networks at rates of 6-7% when government can borrow at rates of closer to 2.5%.”

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31 Comments
  1. Steve 1 8 months ago

    This is typical of the Greens, they don’t believe in renewables and they don’t believe in the future. I thought the future was all about solar & wind power, battery storage with smart grids and local community control. Why should taxpayers bail out old technologies, old systems and large multi national corporations. Every time these distribution networks fail it should reminds us we need to change the system, not prop it up like the Greens want to do. If Government buys out these networks then the Government will be committed to maintaining and defending a 20th century structure when we should be planning and investing for this century and beyond. The $2.8billion should be invested into putting solar panel onto the roofs of Government buildings such as schools and the like and having local battery storage not ensuring company executives get their bonuses this year. Once again this is mindless posturing by the Greens with minimal scrutiny by the left wing msm

    • Lindsay 8 months ago

      I’m not sure how you have managed to interpret their statement as ‘don’t believe in renewables and they don’t believe in the future’. They clearly want to control the grid network to aid in moving the grid towards renewables and ‘the future’.

      Understanding how money works at the federal level will also help here. The ‘taxpayer’ does not fund anything at the federal level. The federal government is not financially constrained, it creates the currency after all. It also creates the laws. It could in theory demand companies hand over assets. They won’t, but they could. So they can easily buy back all of the grid, or in the case of QLD, stop the state government owned company from profit seeking, and turn it into a non-profit organisation. While buying back the grid they could also be putting solar panels on all public buildings. This isn’t an either/or situation. They should do both.

      Privatisation of essential services is never a good idea. Re-nationsalising the grid (and all power generation and sales) is the best long term solution in my opinion.

      • Joe 8 months ago

        Yep, can anyone offer a privatisation that has actually worked long term in the public interest. Telstra, Commonwealth Bank, QANTAS just to name a few, haven’t exactly been resounding success stories.

        • Guy Stewart 8 months ago

          The Australia post model seems to work pretty well.

          • Ren Stimpy 8 months ago

            Snail mail has been undergoing a slow disruption by email, text and instant messaging etc, and the shrinking market for it is why stamps have risen to $1 each, accelerating its own disruption. Australia Post parcel delivery will also be disrupted eventually. At least there’s good competition among current and future private suppliers of those services.

            I’m not against the privatisation of the electricity networks per se, just against the clumsy and rushed way state Liberal governments greased them up then shoved them into monopolistic private ownership in a very forced and unnatural manner, violating consumers without care. Eventually the consumers woke up to that type of Liberal shenanigans, example being the Qld Newman government kicked out in spectacular fashion after one term. The lesson is that the market itself should take care of privatisation and disruption in its own time, not a rushed and clumsy government.

          • Guy Stewart 8 months ago

            I am not seeing the threat to Aus Post Parcel delivery. They are extremely well placed to take advantage of declining letters and increased e-commerce. http://www.news.com.au/finance/business/other-industries/australia-post-firsthalf-profit-soars-to-131-million/news-story/14d6850278927fd02cb06dfe138c424d

          • Ren Stimpy 8 months ago

            As I said eventually, but more like inevitably it will be disrupted. The parcel delivery biz has been growing due to the proliferation of e-commerce, so if there were intrinsic efficiencies prices for parcel delivery should be coming down. But Australia Post have actually been raising their prices for parcel delivery. This reveals what a lumbering and inefficient organisation they really are, ripe for disruption. The disruption will probably emanate from disruptions occurring overseas and spread to Australia (just like Uber). Any deal between Australia Post and Amazon will only forestall the disruption for a few years.

        • Andy Saunders 8 months ago

          Compared to what they were when government-owned? Surely you don’t believe that?

    • Ken Dyer 8 months ago

      The Federal COALition seeks to preserve wealth and privilege for the few. Twenty years ago, the then Victorian LNP Government privatised the electricity networks because that followed the LNP ideaology, that fossil fuels and electricity networks should be owned by a few very rich people who did not really care that using fossil fuels for heat and power, was at a cost to the planet as a whole. Now we see the consequences of those actions in global warming, pollution, early death, etc.

      This ideaology in being undermined because the Sun is free to everybody with the tools to capture its power. Our technology has now improved to a point when we can now capture a proportion of the energy generated by the Sun. Unlike fossil fuels, a finite resource, the Sun is an infinite resource, and as our technology improves over time, more and more of that energy will be produced.

      For the first time in human history we have been able to capture, in a really useful and meaningful way, the energy of another planet, the Sun. This is what most people fail to understand; the Sun provides egalitarian opportunity. The Federal COALition does not like that; it seeks to preserve wealth and privilege for the few. Renewable energy directly contradicts their ideaology.

      If the LNP knew that 20 years on, renewable energy technology would be rapidly supplanting fossil fuels for energy, do you think that they might have thought about privatising the electricity networks a little longer?

    • Hettie 8 months ago

      That’s just pathetic posturing.
      How you can wrestle a well argued case for a government buy back of vital infrastructure that has gaping holes in it because of a failure by the private owners to ensure that the fuses were up to the job, into a claim that the Greens don’t believe in renewables or the future, when the opposite is patently true, defeats me.
      The Greens say, let’s buy back the interconnectors so we can fix the inadequacies, at far lower cost than the private owners.
      You say that means the Greens don’t believe in renewables.
      Give me a break.
      Really. I should know better than to feed the trolls.

  2. Andy Saunders 8 months ago

    Don’t know why the Greens insist the grid has to be nationalised to change the rules. That can be don at any time.

    And as pointed out, the nationalised grids were the worst for gold plating/higher prices.

    • Guy Stewart 8 months ago

      Are you saying energy prices and reliability have improved since privatisation?

      • Andy Saunders 8 months ago

        Nope, I’m saying prices are worse in states with govt-owned grids.

  3. Steve 1 8 months ago

    My point is the system is failing so why should the taxpayer be buying a failing system. If you believe in the future and if you believe in renewables you would be letting the system fail and not proping it up with a government subsidy. Renewables is not just about replacing coal and gas with wind and sunshine, it is about changing the political structure of society and putting the power and control into the hands of the community. If you believed in the future you would put trust in the new technologies and trust in the people to work it out. Your thinking is that the choice is between government and the market, that is 19th and 20th century. If you believe in the future there are other choices.

    • Hettie 8 months ago

      The system is failing partly because the private owners will not spend enough of their obscene profits on ensuring that the system is properly maintained. That ALL its components are adequate to function in the increasingly demanding conditions of high heat and high demand.
      On Sunday, in Vic, the fuses blew in substations and pole top transformers. The poles and wires were “gold plated” to cope with extreme demand, but some how, the fuses were not.
      Gold plated taps, clapped out leather washers.
      The private owners are letting the system fail, so the system should be removed from private control. End of.

  4. Robert Westinghouse 8 months ago

    Should never have been privatised in the first place. A better use of OUR money would be to subsidise PV, batteries and regional production and distribution. Buying an old and failing system is typical of political thought – stupid. I have written to Adam Bandt (and others) and told him to stop being political and push for a real fix.

  5. Radbug 8 months ago

    This is how the Greens can win … everywhere. Talk about the money … get it? … the money!!!

  6. mick 8 months ago

    job just got harder with sa independent lucy gichuhi signing up with malfunctions mob of clowns thats 30 seats and a horrible agenda

    • Ren Stimpy 8 months ago

      not really any harder, a Family First (of origin) member was always going to support conservative legislation anyway. FF have a long history of voting with the conservative/ anti-progressives and against progress and the realities, so nothing has changed in effect.

      • mick 8 months ago

        true but she is now an automatic vote and she will knock around with the dinosaurs

    • Joe 8 months ago

      Ah yes, Lucy….the new ‘Liberal’. I love it how these jokers stand for election under a party flag and then quick as a flasher they change their flag after they gain office. Surely there has to be some regulation of this practice. Isn’t this a kind of fraud on the electors. Just like all of our ‘Dual Citizen’ MP’s, they’ve committed Electoral Law Fraud and get away with it.

      • mick 8 months ago

        agree totally if they change horse there should be another by-election if im a constituent then i want my say if my rep defects to a crew that i wouldnt have voted for fraudulent behavior but legal

        • Joe 8 months ago

          And I’m sick of Two Tongues Turnbull banging on about how Parliament needs to improve. It starts from the top and these ‘defectors’ are an example of how the punters are disrespected and cheated on. If you want to defect then sure do that at the next election. This changing horses mid race business needs to be stopped NOW.

          • mick 8 months ago

            and no i didnt vote for her

  7. Glynn Palmer 8 months ago

    The electricity industry has been evolving for a century.

    It started off as local authorities building power stations, a distribution network and retailing to their constituents. Then it was amalgamated into state controlled generation, transmission, distribution and retail with regional operation and administration.

    When I started in the industry as an administration supervisor in South West Qld in 1983, the town I was based in had its own diesel and gas turbine power station that served about 8,000 customers. We had 4 smaller towns further west that had their own diesel generation and unconnected micro grids. The smallest town had about 21 customers where one employee maintained the generation units. There were 7 separate state owned distribution/retail boards that accounted for their business separately and each had their own board members and CEO. There was no private investment in any of the arms of the industry.

    All of those towns and surrounding areas are now part of the NEM grid, connected by transmission lines. The power stations are all closed. The lower populated rural areas are supplied by a single wire earth return line (SWER) (the small outer branches of the distribution system) .

    The state government has gone through several iterations of reforming the industry, starting from having a centralised electricity commissioner overseeing all the regional generators, transmitters, distributers and retailers. Now Qld has several state owned generator corporations, several privately owned generators, a state owned transmission corporation and 1 state owned distribution corporation. Only Ergon (the regional part of the distribution corporation) still has a retail business to sell to uncompetitive regional Qld customers outside of the SE corner.

    As an accountant, I went from cash accounting to accrual accounting to being corporatized (acting as a private profit making company while all the shares were owned by the government and paying dividends at the direction of the government). The accounts were originally kept for each of the 7 individual distribution/retail franchises. Then in 2000 the 7 distributers were amalgamated into 2 distributers – (1 for the SE corner Which had the majority of customers) and the other for the rest of Qld which was all regional. The regional distributor received community service obligation payments from the government in recognition for its larger network servicing less customers. The 2 distributers were recently amalgamated into 1.

  8. My_Oath 8 months ago

    I can’t really get on board with this. As a Western Australian, my tax money shouldn’t be going to bail out the screwups of the other states. They only way I’d be tempted to agree is if the plan was funded by the GST disbursements to those states who screwed it up. And I can’t see that ever happening.

    The answer lies in the last part of his statement – CHANGE THE RULES. Start by cleaning out AEMC.

  9. Ron Horgan 8 months ago

    Repurchasing the power grid at a time when its centralised function is under challenge
    is questionable. It will probably require expensive surgery to fit the more decentralised model. The second question is the price to be paid.
    If the price is too high us mug electors will be hit both coming and going.
    Seems like the most likely outcome.
    Good idea needing more thought.

    • Greg Hudson 8 months ago

      The sooner we see each small town across Australia with its own wind/solar/battery farm the better. The ultimate ‘distributed’ energy system may not be that far away. Local councils in the bush probably have the money to build them already IMO.

      • Ron Horgan 8 months ago

        Good idea Greg, the energy distribution, sunshine and wind, is already in place. Just harvest and store. The obsolete power grid then has an insurance value to be evaluated against a fuel powered generator.

  10. ben 8 months ago

    I’m glad this is being discussed, but I cannot see it happening.

  11. Greg Hudson 8 months ago

    ”Of course over-investment in, or “gold plating” of, grid infrastructure”
    *IF* in fact the grid was gold plated as we so often hear about, how is it that so many ‘fuses’ blew during the heatwave in Melbourne (which BTW was just a hot day or two, and not even ‘that’ hot compared to some days in the recent past (like 46C in Melb for example). Those doing the gold plating must have forgotten to include fuses in the list of things we are paying for but not receiving. IMO the gold plating is nothing more than BS.

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