PIAC today called on the NSW Government to embrace more imaginative solutions to the state’s energy needs than those recommended in the Owen Report. It’s a disappointing report, said Mark Byrne, Senior Policy Officer at PIAC, with few benefits for consumers or the environment.
The report recommends that the electricity sector in NSW be largely privatised and deregulated in order to encourage new investment. Privatisation often leads to cost-cutting and job losses, as companies try to maximise their returns to shareholders.
This also leads to pressure for greater deregulation. Interstate and overseas experience shows that this usually results in residential consumers being charged higher prices, notes Byrne. With three companies controlling more than eighty percent of the market in NSW, it’s unlikely there will be genuine competition that will lead to lower prices in a deregulated market.
We need to remember that electricity is an essential service. It’s important that not only do we need to ‘keep the lights on’, as Premier Iemma says, but that we do it without the cost becoming a burden to many consumers. If there are no controls on price and service delivery, the profit motive is likely to adversely affect how much people pay, the kind of service they get, how they are treated if they have trouble paying their bills, and so on.
This is likely to affect groups who are less likely to generate profits for private retailers. These include pensioners and other low income and disadvantaged households, and rural consumers whose power costs more to get to their door than city consumers. We have a regulatory system in NSW at present which protects these groups, but the Owen Report implies getting rid of IPART after 2010.
But the need for new power stations is questionable in any case, argues Byrne. The Owen Inquiry was charged, first of all, with determining whether the state needs more generation capacity. The report recommends that a new gas- or coal-fired power station be built by 2014 to meet the state’s needs. However, greater investments in energy efficiency and renewable energy infrastructure could obviate the need for expensive new plants that will increase our greenhouse gas emissions.
PIAC therefore called on the Government to work with stakeholders to explore responses to the state’s future energy needs that protect vulnerable groups while also being environmentally sustainable.
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Public Interest Advocacy Centre. Ph: 02 8898 6532 or 0400 110 169