Electricity prices up, up and away.

Your title is spot on. Two reason electricity prices are going up are:

1. RET,

2. Public ownership of electricity systems is far more expensive than private ownership over the long term. Ridiculous union claims and slow work practices add enormously to the cost of the network. And when government owns the electricity system, from time to time we get incompetent governments in power who use their control of the electricity system through their minister to impose their ideological beliefs through the electricity system, such as carbon restraint policies, renewable energy targets, and similar. This adds enormously to the cost of electricity. As a result, Australia's electricity prices have gone from near the lowest to near the highest in the OECD.

The RET is one example of how such policies increase the cost of electricity.

The Commonwealth government is considering locking in the Renewable Energy Target for 2020 at 45,000 GWh. That’s about 27% of Australia’s projected electricity generation. There was bipartisan support for 20%, not 27%. Labor-Greens legislated 45,000 GWh target. However, Labor-Greens carbon restrain policies cost nearly $20 billion per year and forced aluminium smelting and manufacturing industries and jobs out of Australia. As a result electricity demand decreased so the 20% has become 27%.

The recent RET Review shows the cost of the RET is huge. The CO2 abatement cost is about $100-$200 per tonne CO2. That’s four to eight times the carbon tax that voters rejected at the 2013 election. It’s ten to twenty times the European carbon price, and over 100 times the International carbon price futures.

It is irrational and irresponsible for Labor and Greens to insist on the 45,000 GWh target and irresponsible of the government to consider retreating from reducing the target to 20% (or less). The damage to Australia, in terms of jobs lost over the long term will be huge.

The author should make some efforts to condense his arguments, particularly if his assessment is mostly nonsense. Prices are regulated in private or publicly owned networks by the Australian Energy Regulator. Prices set by any privately-held monopoly have to be regulated in such a manner.

The regulator recently did benchmarking exercise in which it concluded that the private sector was considerably more efficient in its use of capital and management of costs. The ACCC, and Productivity Commission, the Grattan Institute and E&Y have all found similar things.

Because a private operator is more likely to be able to cut costs below the levels set by the AER as "fair", after permitting the operator to keep the difference for a time as an incentive, the regulator would reset prices to the generally lower costs.

I don't think the author appreciates these basic realities.

The argument about keeping the assets as a business to profit state taxpayers has been comprehensively rebutted elsewhere

Well argued and cogent.

No businessman worth the title would sell assets that were so profitable! But a moron or an ideologue (same diff) might!?

And if competition is required, why not corporatize the separate entities as separate corporate entities, and then require them/give them free rein to compete fiercely for market share and their individual survival.

And on the back of mandatory three year labor hire contracts for all the workforce/Government employees.

Those with a record of success finding getting their contracts renewed easy as; whereas those stumbling along, subject to the same market imperatives of any self sustaining private company, should live or die courtesy of those same market imperatives.

And every manager should have an understudy, and a performance based bonus. With the most successful manager offered lucrative terms to head up one of the failures.

And the unions would then be obliged to act as labor hire firms competing for labor hire contracts; or face losing all their members to those not so bloody minded, or more thrifty with other folks pay packets!

For mine, negotiating a profit sharing paradigm, (7-10% of the gross) along with a union member on the board, is the way to go, and would all but automatically eliminate the drones/unreasonable demands from/in the system!

We just don't need to privatize anything, just ensure they're intelligently managed! Ditto state finances! And would that make a nice change/famous firsts!?
Rhrosty.

Peter Lang, there are a lot of conflicting claims on the effects of the RET. Do you have any evidence that the claims of http://www.businessspectator.com.au/article/2014/9/19/renewable-energy/dirty-dozen-myths-ret-debate are wrong?

The RET does not depend on ownership. But it is much easier to hold public monopolies to account than private monopolies.

The real problem is that even in public hands they're trying to make big profits rather than passing the benefits on to consumers.

Nowhere could I find so much as a single verifiable example of privatization resulting in cheaper prices!

Moreover we need a divorce from the great white elephant of a national grid, given the huge transmission losses are forcing prices way up there for everyone; but particularly struggling business!

And we must start replacing coal with far cheaper cleaner thorium, ideally, connected to micro grids. Which would more than halve the cost of industrial power; and or, desalination!

And the roll-out of local biogas production coupled to individual ceramic fuel cells, will not only supply endless free hot water, but domestic power halved yet again.

With the money saved reappearing as improved discretionary spending, the very life blood of any domestic economy.

If the NSW government needs money for profitable money making infrastructure roll-outs, self terminating 30 year bonds beckon!

I mean, there's money to be made, profits to be earned and jobs/jobs/jobs to be created, just rolling out and installing the alternatives; rather than just trying to bleed a captive market white!

Current price gouging, is down to incredible political stupidity; and or, using the power authorities' operating capital as some sort of private political piggy bank!

Think, in smaller communities near a reliable water source; a thirty metre wide three metre high weir, will produce enough energy to power around thirty homes.

More if there are enough solar panels on every roof, and the micro hydro just providing cheap as chips (local water surety) back up; meaning, it's hardly necessary to run expensive transmission lines to small mountain hamlets, which simply forces prices up for those folks already on the grid!

And the roll-out of even smaller weirs further upstream, will quite massively improve the landscape, local soil fertility and production; as well as extending local water surety and environmental flows deep into the heart of the worst possible droughts.

Good insurance every which way you look at it!
Rhrosty.

The RET should be cut back to a real 20%, (or, better still, closed to future investment; this is one of the options recommended by the RET Review Expert Panel).

The cost of abatement with the RET is excessive and cannot be justified on a rational basis (see below). Therefore, the government should close the RET to future investments, and roll the existing investments into the Direct Action process.

Abatement costs of the RET compared with the Labor-Green CO2-e price, the EUA market price and the CER market price are listed below:

RET Review estimates of the RET in $/t CO2-e for the period 2014 to 2030 https://retreview.dpmc.gov.au/56-cost-abatement :
LRET: ACIL Allen: $32-$62
SRES: ACIL Allen: $95-$175
RET: ACIL Allen: $35-$68
RET: Frontier Economics: $55-$65
LGC: Deloitte: $72-$82

Australia’s legislated carbon price was $24.15 when the electorate rejected it at the 2013 election.

EUA market price (10/3/2015) = €6.83/tCO2 http://www.carbonplace.eu/info-commodities-EUA

CER futures price (9/3/2015) = €0.40/tCO2 https://www.eex.com/en/market-data/emission-allowances/derivatives-market/certified-emission-reductions-futures#!/2015/03/09

Therefore, the RET is 2 to 3 times the carbon tax which was rejected by the electorate in 2013; ~5 times the current price of the EUA; and >100 times the CER price (the international ‘carbon’ price).

The rational decision is to close the RET to future investments. Or, as a temporary measure, wind it back to a real 20%.