Victoria’s bold and controversial move to re-enter the government-generated electricity market, to fill gaps created as coal is retired with renewables, has pulled off a coup in recruiting its advisory board, securing a former Telstra CEO, a former chief scientist, and a swag of top sectoral experts.
In a move certain to send shudders through the fossil fuel industry, former telco chief Andy Penn has been appointed to the resurrected State Electricity Commission’s advisory board, and will be joined by Australia’s former chief scientist, Alan Finkel, alongside Anna Skarbek, an investment banker and founding director of the Clean Energy Finance Corporation and now head of the Climateworks Centre.
Also on the panel, chaired by secretary of the Department of Energy Environment and Climate Action in the Victorian government John Bradley (who is president of the Institute of Public Administration Australia Victoria), is Audrey Zibelman, the former boss of Australian Energy Market Operator (AEMO) and staunch consumer advocate Jo Benvenuti, previously chair of the Consumers’ Federation of Australia.
Carbon-rich
The calibre and depth of the advisory group put short shrift to criticisms that the resuscitated SEC was a form of market nationalisation and would be doomed from the outset because a state-backed corporation would struggle to be competitive in a real market where efficiencies and demand decided prices.
Designed as a form of an economic circuit breaker, SEC 2.0 probably has more in common with the original concept of Medibank before it was put made into a for-profit government venture as opposed to classic state-owned enterprises that were often turned into cash cows.
Established by the Whitlam government in 1976, the Medibank venture was intended to provide health coverage at an affordable price at a time when the sector was fragmented and prone to dysfunction and gouging. It later became Medicare under the Hawke government, with the commonwealth retaining the Medibank Private business prior to full privatisation in 2014. In simple terms, it was a price anchor, as opposed to a more proscriptive price ceiling.
Lumpy business
One of the big issues facing consumers and participants the in the energy market is that supply has become lumpy as coal is retired, one of the reasons prices have escalated faster than governments would like, especially with gas now at a premium because of sanctions imposed on Russia.
Like with Medibank, the intention is for the government to enter a challenged market at risk of pricing itself into a wider failure as more renewables come online.
Many generators might not like the idea of the state entering a market that was previously privatised, but there are also strong arguments that price-exposed industries, especially manufacturing, need air cover to stay afloat and curb inflation, with support better provided through market intervention rather than subsidies.
The idea of a government-owned generator is not really that radical. In Queensland, the government has never left the electricity market and uses its hand to attract international business investment.
Moveable feast
If successful, the restarted SEC also has the opportunity to potentially provide a model, indeed a replicable template for other states.
In New South Wales, there is already speculation that Labor opposition leader Chris Minns, who is under increasing pressure to back key poker machine reforms, will float a similar electricity buy-back to that of Victoria’s to create a point of difference during the election campaign.
In the event Minns does so, the move would essentially reverse the result of NSW Labor’s previous epic battle with unions, which has spanned more than a decade, to finally start selling off state electricity assets.
That battle came to a conclusion in 2010 upon the first $5.3 tranche sell-off by then- premier Kristina Keneally.
:
Any feedback or news tips? Here’s where to contact the relevant team.