How do we transition Australia’s Energy Utilities?

For many years a quiet revolution has been sweeping across the globe. Individualized and personalized participatory democracy is a powerful driver of institutional and market change. Adding principles of personal motivation and inclusion makes this driver of social and economic change even more potent. With many people affiliating themselves to broad cause and effect issues the voices calling for reform are quietly seeking alternatives. Climate Change solutions that do not include appropriate risk assessment of ‘NATURAL’ and ‘SOCIAL’ capital are increasingly viewed as pandering to entrenched interest groups. This trend is the primary cause of the political, institutional and industrial crisis sweeping entrenched liberalism. Some have attempted to quantify and qualify this trend as a disruption to the business as usual model. Others have used this trend as a rallying cry for reform. In both cases the rhetoric stalls at the questions that ask simply. Where do we begin? How do we proceed and for whom? In all cases this is precisely where these simplistic debates cease to be of relevance. The real question is how do we change our institutions and our global market structures to include demands for individualized goods and services in a world where everyone wants personalized services and participation in decision making processes? These underlying motivations are visible at all levels of contemporary society regardless of race, ethnicity, sex, religion, sect, caste, class, as well as social and economic status. It is also a trend that identifies the basic contradiction in the social contract. How do we value and respect the wishes of the individual in a society organized on ‘Weberian’ principles supporting centralized monopolistic market behavior and principles of governance as the most rational and cost effective way of managing essential services. The issues of wealth distribution and market inclusiveness make the principles of liberalism a questionable precondition for the ethical values that underpin the notion of governance for the ‘Common Good’. The contradictions that all liberals and conservatives of any persuasion have to content with are the principles of fairness that underpin the modern ideals of participatory democracy and inclusive market participation for the benefit of all. There appears to be no obvious contradiction within the ideology of liberalism that some are more equal than others. Just as much as it is acceptable to pontificate the virtues of superior moral and ethical values in the name of and for the exclusive benefit of the good burgher.

The pathetic notions of team contributory ‘value add’ are simply stupid when individuals ask themselves, ‘for the benefit of whom’? Does the value I contribute to society and the   workplace align with my own understanding of the common good and the personal         expectations that reflect my estimation of my own individual worth? Is the economic return for my contribution enough to satisfy my wants, desires and needs, or do I feel alienated from the feast of benefits that are available for the few? These questions may be dismissed as the sociological pessimism of the time. A leftover aberration of the 60’s and 70’s that has come to haunt us in the form of a twisted world view serving the confused. These sad individuals may also be viewed as the new wave of mass psychosis sweeping the globe in ever growing spirals of radical political and social movements articulating extremist intolerance. However these conflicts are represented by established interest groups is beyond the question of mere tolerance of difference and exclusion. They strike at the heart of legitimacy by questioning the ethical and moral obligations of the ruling elite to the people they claim to represent and serve. In Australia this crisis of legitimacy is nowhere better represented then the hiatus that remains over the country’s national energy plan. Crowing about achieving a COAG consensus for the 49 of the 50 ‘Finkel Review’ recommendations can hardly be seen as a moral and political victory by the Turnbull government. Far from it! At best the ‘Finkel Review’ stated in simplistic terms the status quo that has existed for more than two decades as the consequence of a failure in governance. This failure to engage with the core issues has plagued the national energy sector. The subsequent flow on effects throughout the Australian economy continues to stifle national growth and remains a significant drag on national productivity. The responsibility for this national disgrace has to be laid squarely at the feet of all state and federal politicians and political parties both past and present.

The failure by our politicians to accept collective responsibility is perhaps best articulated in the Turnbull government view, that the adoption of the 50th recommendation is best achieved with due consideration for proper planning, mathematics, engineering and economics by 2020. No Mr. Turnbull! The adoption of the 50th recommendation is best achieved by the implementation of governance, planning, and engineering standards in conjunction with market regulatory, compliance and enforcement standards that meet community and industry expectations now. If it is the intention of the Turnbull government to drag out the core design requirements of the CET (Clean Energy Target) and the definition of a CEC (Clean Energy Credit) dollar value, the Turnbull government will stare into the abyss of its own relevance. Some of us would probably welcome this prospect. Others would argue that the nation can ill afford another stalling tactic by a federal government suffering from indecision and internal division.

Since the ‘Finkel Review’ has for now achieved some sense of broad census and perhaps, a limited spirit of collaboration among political parties, we should assume that the proper design of a CET mechanism is within reach sooner rather than later. The Chief Scientist made the point that the design of a CET should not be difficult since it can easily be modelled on the existing RET scheme. This simplistic analogy may be convenient for the consumption of the ignorant masses. It hardly satisfies the savvy Australian punter who has long regarded the RET as a means to preserve and service the bottom line of Energy and Utility cartels. Constructing a CET subsidy scheme along similar lines to the existing RET is clearly not an option for a responsible 21st century energy market system designed to underpin the future growth and productivity objectives of the Australian economy. What is at issue is whether the existing energy market bodies are able to serve the needs of Australia’s 21st century energy market. Since COAG has accepted that Australia’s energy market bodies must be reformed in order to be more responsive to Australia’s future energy market needs, we have to ask ourselves what is the nature of this reform in detail? Is it acceptable that Australia’s future prosperity is held to ransom by the gas cartels? Is it the view of the Turnbull government that gas is no longer a viable transition fuel? What is the future of Australia’s Energy Utility companies and will they continue to exist in their present form? To what extend will the design of the CET incorporate fundamental reforms to the Energy Utility market by encouraging the transition of Energy Utility companies to become responsible service corporations that place the consumer at the heart of the energy equation? Already we are witnessing dramatic changes in the European and US markets. New entrants to the Australian market are offering rooftop solar plus storage installation deals in return for a zero energy bill to consumers under specific usage guidelines calculated over a 10 to 15 period. At least one of the Utility companies is experimenting with a ‘SolarCoin’ crypto currency model. The growing acceptance of both financial models in the domestic and commercial energy space is likely to fundamentally change both the relevance of the existing energy market institutions and the manner in which Utilities relate to their customers.

 What is abundantly clear to anyone familiar with the energy market in Australia and around the world is that renewable energy technologies as well as the financial models that drive the industry are increasingly focused on servicing the customized energy needs of individual consumers. Smart grid / micro-grid equations that used to read rooftop solar plus storage connected block chains managed by Tag-e (Transactional grid elements) between ‘Prosumer’ groups now include ‘SolarCoin’ crypto currency payment systems. Do we need Utilities to manage our energy bills if community groups organized in local renewable energy zones can manage their own billing whilst owning their own billing data? If we add to this equation the desire by individual renewable energy clusters to achieve a closed renewable supply loop ( Net Zero Emissions ) by supplementing their own supply capacity with a direct power purchase agreement from large scale wind/ solar, hydro, wave, geothermal and tidal facilities via grid integrated battery or thermal storage or waste to energy conversion facilities we have to ask:

  • What is the role of gas as a transition fuel in the economy?
  • Has gas already priced itself out of the equation?
  • What is the role of the Energy Utility in this equation?
  • What is the relevance of the existing market institutions (AEMO, AEMC, AER, NEMO, etc) in this DER 21st century national energy market model?
  • How do we facilitate unrestricted market and grid access for 3rd parties to sharpen competition and provide real consumer value?
  • What is the role of state and local government?
  • How do we effectively manage and reform our institutions to facilitate a positive transition of our energy market to reflect the desire of the individual consumer to be the beneficiary of this new reality?
  • How will Australia’s federal and state governments address the need to transition our Energy and Utility cartels so that they act in the service of the national interest, whilst delivering real value to individual consumer?
  • How hard is it to calculate a Clean Energy Credit dollar value when the effective cost of doing nothing for the next two years is the equivalent of a carbon price above $55 per ton?

 These are the core questions at the heart of the CET design. These are the core questions the Turnbull government and all state and federal politicians have to address in a comprehensive and inclusive national debate if Australia wishes to have an affordable and reliable 21st century national energy system. It is a debate that goes to the very heart of liberal values that Mr. Turnbull’s pragmatic centrist vision of liberalism wishes us to believe in. Yet we see no evidence of his commitment to address the values that underpin our earnest desire for the respect we deserve. What we see is the Energy and Utility cartels ring fencing their existing market shares and manipulating market access in collusion with state governments and existing stakeholders. We see no evidence any comprehensive reform agenda because it would require a fundamental intervention in the market. The level and type of market intervention required is contrary to liberal economic dogma. This is the contradiction in Mr. Turnbull’s liberal party that will play out for the remainder of his tenancy. It is also the real reason why there is no urgency for the design of the CET or setting a realistic CEC dollar value. Planning to release the CET as an election manifesto is not proactive politics that places the issues of electricity price affordability, consumer hardship and the state of the national economy front and center. It is a political game to stall for time and perhaps fool the Australian voter into believing that Mr. Turnbull is not quite the ‘Tin Man’ but instead, a gambler playing the Australian people for mugs.

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