The emperor has no clothes. In fact, the emperor is butt-naked, disrobed by a cattle farmer from Burrell Creek – a place so small, its distinguishing features include a house, a community hall and a phone box … population not stipulated.
Four months ago – on hearing of a proposal to run giant transmission lines through his property – a farmer from the NSW north coast, Bruce Robertson, delved into the claims the power companies had been making about electricity prices. He found they were untrue.
Four days ago, the Productivity Commission corroborated what Robertson had been saying all along. That is, escalating power bills were principally the upshot of over-investment in electricity networks; not the carbon tax, not rising consumption.
Now Robertson says the power lobby has even misled the Senate, by insisting the price rises are the fault of ”peak demand” and rising consumption. As he says in his submission to the Senate inquiry on electricity prices, demand has collapsed. Even so, Grid Australia, the peak body for the $10 billion transmission and distribution sector, has told the Senate that demand is rising.
”Demand is falling, not rising,” Robertson says. ”This basic premise is factually incorrect.”
Page four of the Grid Australia submission to the Senate cites ”key causes of electricity price increases over recent
years” as ”ageing infrastructure” and ”increase in demand”.
These are the ”recognised, industry-wide reasons that contribute to rises in electricity costs”, according to Grid Australia.
”It is often said that if you lie long enough and loud enough, then the lies become the accepted truth,” Robertson says. ”And so it is with Grid Australia, in their submission to the Senate inquiry into electricity prices. Many of the statements made to the Senate inquiry are purely and simply fabrications.”
These are pretty rugged claims; for a farmer from Burrell Creek to accuse the power industry of misleading the government. And if he had bobbed out of the blue with such a bold claim, it could plausibly be discarded as conspiracy. But Robertson has a track record.
Back in May, he first said in these pages that the power companies had been ”gold-plating” their networks. That is, they were deliberately over-spending because they earned a regulated return on the size of their assets. The more they spent, the more they made.
Then in June, he outlined how billions of dollars had been earmarked to upgrade the National Electricity Market based on faulty assumptions of demand.
Demand for electricity had been falling since 2008 in Victoria, NSW and Queensland at roughly 1 per cent a year, despite forecast rises of 2.2 per cent a year.
Demand is now 10 per cent below where the industry forecast it would be four years ago. Mild weather, changing consumer behaviour and rising costs have all been factors in this, Robertson says.
In July, as ”gold-plating” started to become a buzzword in Canberra, Robertson launched into numerical detail of how the industry figures had been inflated and distorted.
Yet there was no cogent or credible response from either the lobby groups or the power companies.
Their defence consisted mostly of ad hominem attacks on Robertson and his local action group, the Manning Alliance.
In early September, the farmer took to demolishing the myth of ”peak demand”. Even as people were cottoning onto the bland and incontrovertible fact that demand for electricity was actually falling, not rising, the power lobby was clinging to the notion that ”peak demand” still justified their surfeit of spending on networks.
It didn’t. Peak demand was falling. Recent figures from the Australian Energy Regulator show the clear change in trend since 2008-09. Peak demand for both summer and winter demands in the national electricity market are on the wane.
In NSW, the largest market in the NEM, peak demand has veritably collapsed. ”The fall in peak in winter since 2008 has been 15 per cent and the fall in the summer peak since 2010-11 has been 18 per cent. This collapse has seen peak demands fall to levels not seen for a decade,” Robertson says.
Despite the hard numbers, we still have a ”he said, she said” debate. ”The only place that peak demand is rising is in the minds of electricity industry executives,” Robertson says.
A spokesperson for the peak body said yesterday: ”Grid Australia agrees with Mr Robertson’s own comment that his review isn’t comprehensive. ‘Beyond that, Grid Australia totally rejects Mr Robertson’s assertions, which are wrong and misleading.”
In this reporter’s books, it is hard to take Grid Australia seriously.
Its submission says: ”The impact of peak period demand growth is putting even greater pressure on the need for greater infrastructure investment.” Note the word ”growth”. As Robertson says, peak demand is falling, not growing.
But don’t take our word for it. Go online today and see Grid Australia’s response to Robertson, and Robertson’s response to Grid Australia.
Also, there will be state-by-state breakdowns on the actual falls in peak winter and summer demands.
The essence of the problem of rising power prices is the structure of the industry and its regulation.
Robertson travels to Canberra at the end of this month with Rob Oakeshott, who is putting a reform bill before Parliament. The guts of the bill is to turn the hodge-podge of state regimes into one federal law and to overhaul the perverse structure of the regulatory environment which acts as a fillip to gold-plating.
Among other mooted solutions to the crisis in energy bills, Robertson sees smart meters as potentially transferring business risk onto the consumer. They are also expensive to install.
A simpler system would be to change the regulations that would allow one access fee and three simple time-of-day tariffs – high, medium and low, he says.
”At the moment, if you want access to off-peak you have to pay. This is ‘dumb-metering’, as it does not encourage people to use electricity when it should be encouraged to be used.
”I can’t work out why the largest possible cost saving as identified by Deloitte [commissioned to report on solutions] that is, peak demand management on pool pumps and airconditioners, is not implemented first.”