Prices of electricity futures have continued their fall as the federal government’s controversial gas price cap legislation passed through parliament, along with measures that will urge and help households to quit gas and go electric.
As the gas industry continued to use the scare tactic of blackouts, and the media such as the AFR decried “a populist assault” on the gas industry, a new report from the Australian Energy Regulator highlighted the inappropriate behaviour of the thermal generation industry over the last six months.
The AER report says it can find no evidence of illegal activity, mainly because the rules and regulations are so hopelessly lax, but it makes clear that it thinks the actions of some generators took “no regard” as to the consequences on the market and consumers.
This has been a constant theme of the debate about price caps, with the gas industry insisting it is entitled to make windfall profits out of the Ukraine war – a stance so out of keeping with the public that it has created an unlikely alliance of groups supporting government price intervention.
“Business welcomes targeted price relief that government can provide in the face of soaring energy bills,” the AIDC industry group said. “However, we are greatly concerned about the market interventions set to pass parliament, as they risk reducing investment and exacerbating supply problems.”
The problem, as underlined by the AER report, is that the fossil fuel industry can no longer be believed, or trusted, to do the right thing.
What little social licence it had left from its refusal to be held to account for the impact of its pollution has been thrown away by the actions in the midst of the energy crisis, and its total disregard for consumers.
“It is brilliant to see that the federal government, having struck an agreement with the Greens and crossbench, has secured the passage through parliament today of its energy price relief plan,” said Tim Buckley, the head of Climate Energy Finance.
“This includes caps on wholesale coal and gas prices, $1.5 billion for energy bill rebates to support Australian households and businesses, and a mandatory code of conduct to ensure permanent reasonable gas pricing – an entirely necessary market intervention to counter the fossil fuel bill shock inflicted by the fossil fuel industry on Australians.”
Buckley says the forward pricing of wholesale electricity for NSW and Queensland – the major coal states – in the first quarter of 2023 has halved in the last month.
“This pre-emptive move by the market is a staggering real-time endorsement of the government’s efforts,” Buckley says. “It had already priced in victory, and a massive reduction in the hyperinflation that was set to smash households and industry in 2023.”
It means that if these price indicators hold true, then the anticipated price hikes in electricity bills in the coming year may be significantly lower than expected. And prices will continue to fall as more renewables come into the system, wrestling the pricing control from the hands of the fossil fuel generators.
Buckley also praises the federal government commitment to support homes and businesses to electrify everything, and “finally cut our reliance on the extortionate, polluting methane gas industry, whilst curbing energy costs.
“In the last few days the gas lobby has shown that it is determined to ensure that nothing will get in its way as it plunders our sovereign public assets to line its own pockets.”
Even the regulator is supporting the switch to renewables from gas, particularly in households.
“I think as we go through the transition to net-zero emissions, ultimately most houses, if not all houses, will convert to electricity,” AER chair Clare Savage told ABC Radio on Thursday.
Savage also warned that it will be “really important” to make sure vulnerable households are not the ones who are the last to electrify, left to carry the cost of the gas system.
The result of that will likely be largely in the hands of the regulator itself, and how it deals with the gas industry pleas for compensation over the “death spiral” of their gas pipeline networks that they are desperately trying to “green” with small infusions of renewable hydrogen.
The Greens, meanwhile, hailed the package as the “beginning of the end of gas” and said gas has joined coal in losing its social licence thanks to its war profiteering, price gouging and contribution to the climate and environmental crisis.
“Gas is as dirty as coal, causing power bill pain as well as the climate crisis,” Greens Leader Adam Bandt said. “Gas is not something to transition to, it’s something to move away from. The Parliament has made that clear.
“The Greens are helping rein in the gas corporations to get more money in people’s pockets.
“Power bills don’t have to keep rising. The legislation gives Labor the ability to freeze power bills. If Labor doesn’t freeze power bills, then any price rises will be their responsibility.
“The Greens will continue our campaign for a windfall profits tax on the greedy gas and coal corporation to fund a two year power bill freeze.”
See also: “No regard” to market outcomes: Regulator savages generator behaviour
