The National Electricity Market (NEM) is under fire from many quarters. A new parliamentary report has criticised many aspects of its operation, and now Tasmania’s Liberal Government has said that if returned to office after the 3 March election it will withdraw the state entirely from the NEM by 20121.
Tasmania, which has abundant hydroelectric power and the lowest electricity prices in Australia, only joined the NEM in 2005. “With Tasmania charging toward 100 per cent energy self-sufficiency,. now is the time to take back our competitive advantage and break away from inflated mainland prices, and to drive down the cost of living of Tasmanians,” said Tasmania Premier Will Hodgman.
The NEM dates from 1998, when the Howard Government brought together the wholesale electricity markets operating in NSW, Victoria, Queensland, South Australia and the ACT. Tasmania joined when the Basslink interconnector, which enabled its electricity to be carried under ass Strait, became operative. Western Australia and the Northern Territory, geographically isolated, have never been part of the NEM.
The Tasmania Liberals’ announcement came on the same day as the release of a major new bipartisan report from the cross-party Parliamentary Committee on the Environment and Energy. It is a ‘consensus’ report, from a committee headed by a Liberal, and with ALP, National and Green members. Such reports are usually quite bland, but this one is highly critical of the NEM, even if many of its comments are masked by bureaucratese.
“It has become increasingly apparent that modernising this essential piece of infrastructure is necessary to future-proof the grid,” says the report. It makes 23 recommendations, most of whicxh have to do with improving the resilience of the NEM. The first four:
- The Committee affirms the importance of resolving policy uncertainty in relation to emissions reduction in the electricity sector. The Committee commends to the House the establishment of a stable and enduring mechanism for scalable emissions reduction in the electricity sector, with appropriate notice given for changes in targets.
- The Committee recommends that the Minister for the Environment and Energy, through the Council of Australian Governments Energy Council, investigate new market, non-market, and regulatory, approaches to maintaining an adequate level of flexible, dispatchable capacity in the National Electricity Market.
- The Committee recommends that the Minister for the Environment and Energy, through the Council of Australian Governments Energy Council, investigate new market, non-market, and regulatory approaches to maintaining an adequate level of system security services in the National Electricity Market.
- The Committee recommends that the Minister for the Environment and Energy, through the Council of Australian Governments Energy Council, identify and implement changes to improve the responsiveness of the rule-making process in the National Electricity Market.
One of the Committee members was Green Adam Bandt. As might be expected, he was far more critical. The Greens have gone so far as to call for the reprivatisation of the electricity grid.
“The consensus report r shows that Parliament agrees that the rules governing our electricity market are broken.
“Now that there’s consensus that the rules that govern our grid are broken, the next step is to start fixing them,” he said in a statement after the report was released.
“Fixing the grid means standing up to the Cayman Islands company and other corporations that own our network and instead running it in the public interest. Without reform, the incumbent generators and special interests will continue to stymie any attempts to transition our electricity grid.
“We need to stop thinking about how to save dirty old clunkers like Liddell and start thinking about how to plan for and establish new ‘Renewable Energy Zones’ to take advantage of our abundant solar and wind potential. If we leave it up to big corporations seeking only to maximise their profit at public expense, renewable energy zones won’t happen.
“The rules are not working. Privatisation has failed. It’s time for Labor and the Liberals to admit that. It’s clear that the Cayman Islands company and big corporations who own our grid are not interested in a 21st century grid, they’re interested in shareholder profit.”
Labor ais also critical. “The Tasmanian Liberal Government has belled the cat on Malcolm Turnbull’s failed energy policy,” said the ALP’s energy spokesman Mark Butler.
“The NEM is in crisis and the Tasmanian Liberal Government has no faith in the Turnbull Government’s ability to fix it, seeing ‘de-linking from inflated mainland electricity prices in the National Electricity Market’ as the best strategy for the tate.
“This decision follows the Energy Security Board warning late last year that the health of the NEM is in ‘intensive care’ and is currently delivering an electricity system where ‘reliability risks are increasing, electricity bills are not affordable, and future carbon emissions policy is uncertain’.”
Any change to the NEM will be debated as the next meeting of the Council of Australian Governments (COAG) Energy Council, which last November deferred until April 2018 any decision on whether to adopt the Federal Government’s National Energy Guarantee (NEG) plan, integral to how the NEM will operate in the future.
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