Malcolm Turnbull ticks off his energy to-do list but obstacles remain
Coalition MPs returning to Canberra are laughing off the potential for political damage to Malcolm Turnbull. (ABC News: Matt Roberts)
“I hope I’m not sounding like a broken record,” the Prime Minister told the Queensland Press Club this week, “but believe me, I’m bringing all of my many years of business experience to this task”.
The particular task Malcolm Turnbull was talking about in Brisbane was energy prices and reliability of energy supply. But there is a certain methodical, Excel-spreadsheet approach to his prime ministerial style.
It’s like Google throws up the tasks he has to do each day and he goes through them. Tick. Tick. Tick.
Some of them aren’t that easily dealt with of course. Some of them he has not dealt with at all, or not to the satisfaction of a large proportion of the population.
It’s not a particularly “political” approach, or one with much razzamatazz, but on he goes, one step after another, gradually clearing the land mines and potholes in his political path, and on the policy agenda.
Appeasing WA, SA and now QLD
Sometimes it looks like he approaches political problems a bit the same way he approaches the policy problems.
Last week, for example, the government signed off on a new proposal for distributing the GST among the states. It was a job that had to be done, a system that needed to be cleaned up, but it also put an important floor under the political fortunes of the Coalition in Western Australia.
South Australia has also been a point of vulnerability for the Coalition. And it seems there has been a never-ending and eye-boggling amount of money thrown into that state in defence industry contracts.
This week, jogging alongside the release of the Australian Competition and Consumer Commission’s electricity supply and prices report, has been an important step in the task of addressing the Coalition’s political problems in Queensland, and settling down the divisions within the Coalition over coal.
Having said that, the triumphant claims of vindication about coal by the Nationals in the wake of the release of the ACCC report has rather confused the discussion about what it actually said.
So let’s put the politics to one side for a moment (remember that idea) and note what all the experts are saying about our energy market, and what needs to be done about it to fix both reliability of supply and prices.
What are the experts suggesting?
There is now a great coalescing of advice coming from the various government bodies that work full time, or sometimes, in the energy space.
The Energy Security Board, the Australian Energy Market Operator, and now the ACCC are all coming into very similar points — from different directions and briefs — about what needs to be done to variously ensure reliability, reduce prices, increase competition and also reduce emissions.
During the question and answer session after the Prime Minister’s Brisbane speech on Wednesday, he was asked about the time frame for considering the 56 recommendations of the ACCC report.
The government has given itself until the end of the year to consider the almost 400 pages of the report.
On the face of it, that means it potentially won’t respond to what is the recommendation attracting most interest in the political space this week: recommendation four — which essentially says the government should operate a scheme that would guarantee to buy electricity in, say, 10 to 15 years time from new power generation projects, at low but fixed prices, if they can’t sell it elsewhere.
The idea is that this would give investors certainty they currently don’t have, without necessarily locking the government into having to buy power, and, certainly without offering any upfront subsidies for a new power generation plant.
A project would have to have at least three large customers, and not be one proposed by an existing large energy retailer or wholesaler.
A win for coal?
This is the idea which the Nationals, and coal supporters, have characterised as a win for those seeking subsidies for coal.
As the Prime Minister says, the proposal is actually technology neutral. The projects that would get the nod would be the best on offer.
If that happens to be coal, so be it.
But as ACCC Chairman Rod Sims observed this week, the only people putting forward proposals for new power plants to the commission were talking about plants driven by forms of energy other than coal.
The technology-neutrality echoes the national energy guarantee scheme put forward by the Energy Security Board.
And the market mechanism also reflects proposals put to the government by the Australian Energy Market Operator (AEMO).
A guarantee to support new power plants won’t necessarily favour coal. (Unsplash.com: IMPA, CC-0)
‘Reverse auctioning’ power?
This brings us back to the Prime Minister’s answer on Wednesday to the timing question.
Mr Turnbull said he was “very attracted” to the option put forward by the ACCC “because it works in a similar way to a reverse auction concept that we’ve been looking at with AEMO”.
This scheme he said involved AEMO identifying a gap in forecast dispatchable power and asking for bids “to fill that gap and then have, in effect, a reverse auction”.
“It’s a technique used in many other markets around the world, but it does require that intervention to support the bringing in of new firmed or dispatchable power. When I say firmed or dispatchable power, for everyone’s benefit, what we’re talking about is energy that’s available on demand.”
“So, that could be many different types. That could be coal, it could be gas, it could be hydro, it could be battery, it could be biomass. There’s no doubt others as well.”
In other words, the government is already working actively on this concept as part of its energy plans.
How the timing of that work will fit in to the negotiations with the states on the National Energy Guarantee, which they are supposed to sort out next month, isn’t entirely clear.
‘Focus on the customer’
Consumers who are suffering from stratospheric energy bills probably don’t give as much of a rats just now about how new power might be generated as they do about whether it cuts prices.
The Prime Minister says “the critical thing is to be technology agnostic and just focus, with a laser-like focus, on the customer and getting the prices down for the customer”.
None of that can hurt just a couple of weeks from five by-elections.
The great irony though is that, if a coal-fired power station were to be built, it is much more likely this would happen in NSW, rather than Queensland, given planning approvals rest with the states. NSW also currently has the biggest energy shortfall.
The Nats want a coal-fired power station in far north Queensland.
This week, the Prime Minister may have been able to add two more ticks to his to do list. But appeasing Queensland may still require a bit more work.
Laura Tingle is 7.30’s chief political correspondent.