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article imageOp-Ed: Power price surge based on misleading data? Lessons for the world

By Paul Wallis     Nov 14, 2012 in World
Sydney - Australia’s experience of the mysteries of power costs is getting more mysterious by the second. The 50% price rise is costing everyone a lot of money, and it now emerges that data provided to justify price rises may have been seriously flawed.
Having been told demand was rising by the power companies, the fact has since emerged that it’s actually falling. Old infrastructure hasn’t been upgraded, making it even less efficient and, naturally, meant there were no outlays on new technology.
Several hundred million dollars, in fact, according to the industry’s own figures, were definitely not spent on upgrades over the last few decades. Exactly why the public should pay for inefficiency and failure to conduct basic business hasn’t been explained.
Imagine not upgrading your infrastructure for decades, then simply hitting the public with the costs of the money you didn’t spend. The electricity industry has never even been suggested to be short of money in that time. Also imagine conducting your business with no regard to inefficient plant and equipment which would have been costing a fortune for that length of time in lost savings alone.
The power industry has simply documented everything it didn’t do for itself, and used that as the basis for a price rise.
The trouble is that the price rises appear to be based on quite selective information, however ingenuous or disingenuous. Price rises were granted on the basis of information which now is obviously of dubious quality. Even the Senate was given responses to requests for information which now appear to have fallen far short of full disclosure.
This is the old Yes Minister approach:
Don’t provide information which may lead to questions.
Answer rhetorical questions you pose yourself.
It’s easy enough to sympathize with anyone involved in the price rise claim who thought they were getting complete information, which is apparently not the case according to subsequent (disputed) information obtained since. The price rise was evidently granted in good faith, on the basis that the information provided was sufficient to make an appropriate decision.
Economics? What economics?
The economic problem, as usual, is the ritualistic mining of the public and business for cash. Apparently the theory is that the public is an endless charity, put on Earth simply to pay for every whim of anyone who’d like some more money any time they feel like it. In this case hard cash is being pulled out of the entire Australian economy simply to pay for what seems to be an entirely anti-competitive commercial pricing structure.
(Admittedly, the current cartel-like situation has arisen largely because of the fact that retail suppliers pay pretty much the same wholesale charges off the state-owned grid for the power they sell to consumers. However, this situation does therefore automatically qualify as an issue in terms of the Competition Act. Price fixing, real or imaginary, intentional or unintentional, is totally contrary to the principles of that Act.)
Meanwhile, a lot of people are being hit hard. Pensioners are literally going cold and sweltering, to pay for what? Businesses are being hit with charges they don’t need against their margins. This is an acceptable outcome? Acceptable to whom? Since when is creating more overheads for the entire country good policy?
The screaming need in Australia is to cut overheads, not create new ones out of thin air. The big spike in electricity prices can be mapped, and it’s a very nasty picture of cash draining directly out of the consumer economy. It’s doing so to the detriment of everybody.
Some consumers have a choice between buying food or paying bills. Businesses now have cost increases for simply being open.
Energy efficiency
“Energy efficiency” are the two words you will never hear in any discussion of power supply. One of the reasons for falling demand is that so much of the new technology uses a lot less power than its antiquated forebears. Most electronics and even major appliances simply don’t need vast amounts of electricity.
They’d be dangerous if they did get too much power. Some of them would either catch fire, cause shorts, or simply crash. Current can heat electronics and actually do serious damage to them.
Apparently this too-obvious fact slipped by unnoticed, like a mountain range nobody was looking at. The impact of energy efficient technology has never even been mentioned in terms of discussing power demand.
Solutions- There are a few
IPART, the regulatory body responsible for approving the price rises, is under no obligation to uphold any decision based on flawed information. It could, quite properly, say that the decision is not in the public interest, simply because the information was lacking in necessary detail. The decision could simply be annulled, meaning new prices do not apply.
State and Federal governments don’t have to tolerate inefficiency in the power supply system. This is classed by law as an essential service. It can be governed under the terms of the Essential Services laws if necessary. The New South Wales, Victorian and Federal governments are notably unimpressed with matters as they stand just now. Business, charity and consumer groups are furious. That’s just about everybody.
Governments also don’t have to tolerate being given incomplete information. Nor does the Senate. Information given to either is supposed to be factual. Whether given under oath nor not, it’s a reasonable expectation that any information provided would not be in any way misleading, intentionally or otherwise. Further investigation under the relevant laws, notably the Corporations Act, may be justified.
(Section 61, director obligations, is so often fascinating, even if it is the monotonous first stop for corporate investigations related to conduct of business. It’s also extremely relevant in terms of information in the possession of directors across the entire spectrum of this price rise claim.)
Investigation of corporate conduct may also require checking the validity of legal action threatened against a Mr Robertson, who apparently provided information related to actual demand upon which the price rises were approved. Mr Robertson has allegedly been singled out for targeting because of his actions, which appear to have been very much in the public interest.
Need I mention that penalizing anyone for acting as a whistleblower has its own obvious connotations? The industry has given itself a bad look with its price rises, and this particular action makes that look downright ugly.
The link is to an Sydney Morning Herald article which appears to indicate that legal action is threatened against Mr Robertson by an entity without legal status. This in itself could be a legal malfeasance, (not to say grotesque) insofar as the court cannot hear a case made by a non-existent legal entity.
If the Sydney Morning Herald article’s assertions are correct, the proposed action is entirely inappropriate.
Australian journalists may be interested to hear that reporting information and expressing opinions about electricity price rises is not a crime. Any interference with your lawful conduct of your business as a journalist may be grounds for seeking damages. Standover tactics tend to attract more trouble than they stop, for some reason.
Post script: Threatened legal action against Mr Robinson has now been withdrawn and the industry body involved has apologized for the situation.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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