Day 122: 'Net-zero by 2050 vision'
An introductory weekday newsletter from Schwartz Media. Counting the days since Australia had an energy policy.
Good morning and welcome to day 122.
Today in summary: the AEMC rejects the government’s proposed cap on default power prices; NSW and SA move closer to building a A$1.3b power interconnector; and NSW’s state government distances itself from the inaction of the federal government on energy and climate change.
— Sophie
Today’s policy spin level: 💨💨💨
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The Australian Energy Market Commission has rejected the federal government’s proposal to cap default power prices for consumers who have not taken up market offers, report The SMH and The Age. Documents obtained by the papers show AEMC chairman John Pierce argued the default offer should be developed as a comparison rate rather than a capped price, because a comparison rate:
“is likely to address the problems of unreasonably high standing offers and a lack of comparability between market offers, without the risks associated with a default offer designed as a regulated price cap."
The state energy ministers of NSW and South Australia have signed an MOU for a framework for a A$1.3 billion power connector. The government of SA, led by Steven Marshall, said it is showing its commitment to the project by starting work on line and site selection, coordinating planning approvals, starting environmental and social studies, and beginning a community engagement strategy as they need to acquire easements from landowners.
The NSW state government has distanced itself further from the Morrison government with state energy minister Don Harwin writing an editorial in the AFR criticising the lack of action at a federal level. The NSW state election is on March 23rd, 2019.
Harwin said politicians need to “put science, economics and engineering ahead of ideology”, and at the COAG Energy Council meeting today, NSW will move that the Energy Security Board provide policy options to ministers on how to achieve a “net-zero by 2050” vision. Harwin said:
"The federal government is out of touch on energy and climate policy, which is preventing new investment and prices from falling. It's time for them to change course.”
The Commentariat
In The Australian, Judith Sloan writes that the Morrison government’s big stick forced divestment proposal is “not an anti-Liberal idea”.
“Even casual observation of the component parts of the electricity industry leads to the conclusion that there are widespread pockets of market concentration.”
“For the first time in many years, progress is being made that may lead to lower prices. Some of the initiatives could come to nothing — there is little time — and the states and territories continue to act in perverse ways that put upward pressure on prices. But recognising the challenges is always the best way to start the journey.”
Three more things
AGL’s incoming CEO Brett Redman, who joked his A$1.65 million salary makes him the “economy model” compared to the “expensive overseas model” of Andy Vesey, says he’s looking to build on the relationship AGL has with Canberra. Redman told the AFR while the company was opposed to any re-regulation of retail prices, like the government’s default market offer proposal, it was working towards getting a good quality reference price up and running.
Japanese conglomerate Mitsubishi has exited the thermal coal sector in Australia, selling its 31% stake in the Clermont coal mine to a joint venture between Glencore and Sumitomo Corp, and its 10% stake in Ulan coal mine to Glencore in deals worth a collective A$750 million. The group will continue its coking coal partnership with BHP.
New solar households in the UK have been told by the British government they will need to give excess energy away to energy companies for free as the country’s solar feed-in export tariff comes to an end. The change will apply to households installing solar panels after April next year, and not the 800,000 who had them fitted since the feed-in scheme launched in 2010.