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By Jo Nova
With exquisite timing, another price rise in Australian electricity arrived just in time for the next election
As the Opposition point out the Labor government went to the last election telling us 97 times how they would make our electricity $275 cheaper, but with the latest rise, it’ll cost more like $1,300 more than it did before the Labor party were elected. Prices look set to rise about two or three times faster than inflation. But coming after big blockbuster rises two years in a row, even a 5 or 10% rise is nasty.
The Australian Energy Regulator (AER). Being part of The Blob, diplomatically and uselessly blame nearly every part of the system, as though this is just bad luck, even though they must know exactly which single dominant factor has changed in the last 30 years.
Average wholesale market spot prices increased across 2024, impacted by factors such as high demand, coal generator and network outages, and low solar and wind output that drove high price events across DMO regions. These high price events have also affected the price of wholesale electricity contracts for 2025–26.
Meanwhile Minister Chris Bowen, Mr Blackout himself, blames coal and the Russians:
Energy Minister Chris Bowen defended the government’s energy policy, insisting that the unreliability of coal was responsible for the rise.
“Not a day in the last two years have we had a coal-fired power station not break down somewhere in Australia,” he said. “Not talking about planned maintenance, I’m talking about unexpected breakdowns which then see energy prices spike. The government wants to replace that power with “more reliable, cleaner, cheaper renewable energy”, he said.
“What we have seen is substantial world movements in energy prices as a direct result of the long tail of Covid and supply-chain issues, but also of the Russian invasion of Ukraine,” the Prime Minister said on Thursday.
As for the failures of coal plants, it’s like being gas-lit. If electricity costs more when we have less coal, what happens when we have no coal?
No one is buying the pandemic-war-excuse anymore. The price of oil is the same as what it was before Covid and the Ukrainian war, so is the price of coal, and LNG. In any case, Australia is one the top three exporters of coal and gas in the world, and so if we’re short, it’s because we screwed up.
The real problem with the “old” coal plants is that we are running them full tilt, treating them like dirt and giving them away to corporations for $1 (Vale Liddell!) Many of the companies that own coal plants also own a suite of competing generators and happen to benefit when some coal breaks down because they earn more off the price spikes. In a fake free market, AGL paid $1 for Liddell, but wouldn’t sell it for $250 million a few years later because it was worth more dead than it was as a functioning plant.
The auction rules for the Australian electricity market means that the highest winning bid that was needed by the market operator is paid to every single player who successful bid (even though they may have offered a lower price). So removing a low bidder shifts the winning bid “up” a layer to the next highest bidder in the stack. Effectively, nearly every big player benefits when one low cost asset is disabled or removed.
The top accepted bid sets the price for all the players.
If we had of used rune stones and chicken entrails to design our national energy policy it wouldn’t be this embarrassing.
Will any journalist pin that Minister down with some basic questions? Does he realize coal plants can be maintained for 50 to 70 years? If we delay “Net Zero” targets by ten years, or even a hundred, would any Australian notice? How many degrees of cooling will we achieve and at what cost? What are the interest payments costing us on our global weather control… (Readers can suggest more questions below. What should an Energy Minister know?)
The leader of the opposition has called for the Energy Minister to be sacked. The mystery is why he was put there in the first place.