AEMO sails under radar amid renewable energy blamefest

by | Feb 12, 2017 | Energy, Government

Somebody put it nicely on Twitter the other day. When the world moved to cars from the good old horse-and-buggy, there were teething problems. Roads were no good, cars got bogged.

Roads soon improved however, as did cars, and despite the efforts of some to enforce 19th century traditions – such as former PM Tony Abbott with his knights and dames caper – the world is moving on.

Australia, with its failure of energy policy, is being left behind. Stunts such as Scott Morrison waving a lump of coal about in parliament, and “policy” such as flinging a billion dollars in taxpayers’ money at an Indian billionaire trying to build the world’s largest new thermal coal mine, only entrench the rising disaffection in the community with politics – and the perception that our political leaders are in hock to the fossil fuel industry.

Accusations that South Australia’s outages and price rises were caused by renewables have thankfully been debunked in recent days by the simple fact that Queensland power prices have run even higher, and Queensland is not big on renewables like SA.

Amid the blame-fest then, amid the rancorous debate now raging about renewables and coal it is worth considering who operates Australia’s power networks. It is the Australian Energy Market Operator (AEMO).

Being an obscure acronym, AEMO has escaped public attention yet AEMO has been woeful in its energy forecasts, and AEMO is a company which 40 per cent owned by big, mostly foreign-owned power companies. Its board is stacked with industry executives, consultants and directors from Big Law and Big Four accounting, whose firms earn millions from advising the power giants.

Peak demand for profits is rising

The reason this is important is because AEMO’s forecasts for gas and electricity have been wildly over-inflated over the years, horribly wrong. And the reason this is important is that, the more power companies charge, the more they earn, and they get to spend more and charge more if AEMO’s forecasts for electricity and gas demand are higher.

Despite however the clear conflict of interest in AEMO having industry shareholders and directors, if you proceed to the Board and Governance section on its website and tap up “Conflict of Interest Guidelines – Director Interests Protocol”, you will find this: “Server Error. 404 -File of directory not found”.

Gas demand forecasts are completely fracked

It is hard to imagine that, if state electricity corporations still ran the show, prices for gas and electricity would have shot up 100 per cent over the past few years. Rather, somebody would have been held accountable; somebody would have had to trudge up to Senate Estimates each year to explain to the politicians why prices had risen by more than 2.9 per cent.

Instead, we have ten per cent price rises and rising “energy poverty”. We have a corporatised and privatised system where every entity has its own board, executive, HR, PR, you name it, dozens of them, all wanting a feed.

Then there are the lawyers, accountants and external consultants who earn their feed by advising industry, reinforcing extravagant spending claims by the power giants – spending which goes directly to our energy bills.

All this goes further to the abject failure in Australia’s energy policy. So, to run through the AEMO directors, we have: chair Tony Marxsen who is a consultant, Jon Hubbard, formerly PwC and an energy company director, Sibylle Krieger, who is ex-Clayton Utz, Stephen Orr “extensive senior management experience in the energy industry”, Jane Tongs, ex-PwC, Frank Calabria, presently CEO of Energy Markets for Origin Energy, Peter Davis, former CEO of Aurora Energy, and John Pittard, ex-Shell and chairman of RXP Services.

DORC rort: The art of getting energy infrastructure paid for twice

Surely, these directors ought to disclose their conflicts clearly on the AEMO website. Surely, AEMO should be in the spotlight as clearly as coal, and the scapegoat for recent power outages, renewables.

As power bills swell, so do the fortunes of power companies and billionaires

ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

1 Comment

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    Not surprised at the board of AEMO. It should have at the very least some academic representation, someone in the field of energy economics. More importantly, the board is geared to enhance the private utility businesses profits rather than meeting essential service of lowest cost electricity for consumers while taking into account other social expenses in the production of electricity (health, environment and climate costs).

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