The article seems to have too many wotifs to be very credible.
David

For those who feel governments know best, some breaking news.

In November 2014 the regulator decided to begin lowering prices for the five years from 2014.

Baird’s Minister for Energy, Anthony Roberts on 27 Nov crooned (http://www.davidelliott.com.au/archives/1833) how prices are now coming down, will keep a lid on the cost of living and how “Mike Baird is the man you can trust”

Everyone it seems was celebrating the forthcoming fall by 10% in power bills.

But then on 5 February something strange happened. Business Spectator quoted a report from the Australian Financial Review announcing that the NSW government made a 180-degree turn. It now refuses to accept the umpire’s decision and is vigorously OPPOSING the proposed fall in prices.

Yep, OPPOSING the 10% fall in price consumers would pay. Instead, it is beating the drums, in support of an 8% INCREASE in prices.

You read that right.That what Business Spectator reported in the body of a pro-privatisation column.

8% hike in prices in addition to years of high electricity prices consumers in the First State have been fleeced to pay for the gold plating of infrastructure.

Looks to me like fattening a multi billion dollar lamb before slaughter.

To Jonathon Ariel.

You don't know what you are talking about.

As an electrician, I have worked with the State owned Electricity Commission and I have personally seen the drunkenness, over manning, feather bedding, and overpayment of ELCOM workers.

My firm wired up the 330Kv Kemps Creek HV switchyard. The ELCOM boss drove down to the local to the pub every day and drove back piissed at 4-30 PM so that he could claim 2 hours overtime. There were 12 men from our firm to wire up the yard, and 36 ELCOM workers to test what we had installed. They arrived around 7.AM and did not leave their crib room until 10.30AM. It took six men to test any circuit.

Out in the field there were three blokes. One bloke got up the ladder and shorted out the cable under test. One bloke held the ladder, and another used the walkie talkie. Inside the control room, one bloke held the meter and read it, one bloke held the test leads, and one bloke held the walkie talkie.

On remote jobs the private industry workers were getting (at that time) $98 dollars a day Living Away From Home allowance. The ELCOM blokes got $58 a day. We were expected to start on the job at Cooma, Oberon, or wherever at 7AM on Monday morning. The ELCOM "workers" started in Sydney at 7AM and drove in ELCOM cars, stopping for a leisurely lunch along the way. On Friday's our boss would allow us to knock off around 2-30 PM to drive back to Sydney. The ELCOM "workers were gone at 9AM.

When I worked on the Drayton Coal Mine in the Hunter valley, there was a scandal in the power station next door. The ELCOM worker doing the critical job in the control room was in his chair in front of his controls, surrounded by beer cans, drunk and asleep. He was sacked but reinstated, because the union said that while it was true that he was asleep surrounded by beer cans, it was not legally established that he was drunk.

Continued.

Continued.

Drive past any power station and note that there are two types of parking. The ELCOM workers get undercover parking, while the lowly workers who do the damned work around the place get to park out in the hot sun. The ELCOM workers who bother to drive to work anyway. ELCOM workers would arrive at work and leave again in taxis paid for by ELCOM.

Look Jonathon, I don't know what your personal philosophy is, but I presume that you are another Socialist fighting the good battle for the "workers". You are part of the push by my own union to prevent the selloff of Electricity Commission assets to public companies. But I can tell you, that I oppose my own union on this subject. I am a worker, and I will not support outright, overpaid bludgers. If any "emeritus professor" ever spent a day in the hot sun sweating with a bull gang pulling cables on an ELCOM job, and watched the government "workers" merrily driving around in the golf carts doing sweet FA, he would get himself a reality check.

I know all about ENRON and what went on with that privately owned energy company in the USA. But the reform of the state owned Electricity industry is way past it's due. The direction of history in all societies today, is to get rid of state owned enterprises because that are always a financial black hole. From what I have personally seen with state owned enterprises like ELCOM and Sydney water, I can only say that I understand why Socialism failed in Russia and China. Private industry can be bad, but state controlled enterprises are a lot worse.

I am absolutely convinced that the primary reason for the extortionate rates of electricity prices in NSW is because of the scandal within the state owned electricity industry. And because of that, aluminium smelters are closing and pensioners are
too poor to turn on their air conditioners.

Jonathon Ariel,

>"For those who feel governments know best, ..."

Government certainly don't know best about how to run industries or businesses. That's why they shouldn't be running the electricity industry - anymore than they should be running the grocery supply system, farms, banks, telecommunications, media, etc.

Despite your qualifications as "economist and financial analyst. He holds a MBA from the Australian Graduate School of Management.", you clearly haven't learnt the most fundamental concepts in economics. I'd urge you and other followers of this thread to read the classic: "Economics in one lesson" http://steshaw.org/economics-in-one-lesson/contents.html.

Ariel has mad the fundamental mistake of not looking at all the consequences (costs and benefits) of privatization. When you do this you will understand why it is best to privatise businesses like the electricity industry and release the capital for other purposes when government can do it better (in Australia), such as health, hospitals, education, roads and public transport infrastructure, law and order, etc.

Two principles which are usually true are: (1) commercial activity is more cost effectively and efficiently administered by the private sector (2) Private sector investment seeks the best available return on capital at lowest risk while the vendor seeks the best possible return on asset.

Private sector in long established public assets usually produces better management, more efficient use of labor, reduction in size of and increased productivity of the labor force. Result – redundancy and possibly rising unemployment.

Obtaining best possible yield from investment in a natural monopoly is obtained by paying the lowest price possible and thereafter being able to sustain an acceptable rate of return by increasing future charges levied by the monopoly. The latter does not necessarily involve increasing cost of electricity delivered but can be achieved by increasing “supplementary” charges and introducing new ones. Result – Cost to consumers increases at least at a rate which maintains or grows real return investment.

Sale of a natural monopoly is always questionable, particularly when its management, operating efficient and yield can always be improved by retaining public ownership but installing hard-nosed private sector management who’s remuneration is linked to achievement of commercial benchmarks. That is more likely to leave both consumers and government better-off.