In a radical effort to lower energy prices, the Greens Party has floated the idea of launching a government-owned energy retailer, but how effective this solution will be is up for debate.
Greens leader Richard Di Natale unveiled his party’s dramatic solution to rising energy prices on Wednesday, telling the National Press Club that a publicly-owned energy retailer they refer to as Power Australia would ease Australia’s growing power bill woes.
“You don’t need to be an expert to see that big private companies, whose legal requirement is to maximise their own profits, should not also be handed the responsibility of looking after our health, our education, or even our ability to turn the lights on,” he said.
“Quite simply, corporate interests should not be in charge of essential public services.”
The idea behind the Greens’ proposal is that a state-run energy retailer wouldn’t need to make a profit, meaning it could run at-cost and keep prices low.
It would also mean added competition in the energy retail market, something the Greens said is currently stifled by the fact customers need electricity.
“This ‘contestability’ of electricity retailing is a neoliberal experiment that has failed. All it delivers is merciless advertising and intentionally complex tariff structures to make it next-to-impossible for customers to know if they are getting a good deal,” the party said in their statement outlining the proposal.
“That is why the big three retailers made a staggering $2.3 billion in profit last financial year, with energy profits soaring by an average 54 per cent in the last year alone.”
Additionally, this new retailer would only buy energy from renewable sources.
The flip side
It all sounds well and good, but Grattan Institute energy program director Tony Wood told The New Daily that the plan doesn’t quite address the problems causing the high price of energy.
Rather than being a function of greedy providers, Mr Woods suspects our high energy prices are the result of years of bad policy and inaction on climate change, alongside a rise in the price of the resources used to make energy.
Historically, energy prices in Australia were “low and stable” for over a decade following the launch of the privatised national energy market in 1998, Mr Woods said, but over time prices went up because regulators miscalculated how much growth in demand for energy we’d see, resulting in overspend on power networks which forced costs up “dramatically”.
As this was unfolding, the issue of climate change reared its head and was met with very little action from Australia’s political class, which Mr Woods said was another costly mistake.
“It’s been very ugly politically, but it’s also been very ugly in terms of investing in the sector because as we’re deciding what to do to replace ageing power stations, what do we do to deal with the possibility,” he said.
“Successive governments have consistently failed to deliver credible, predictable, stable policy, and so what we’ve ended up with is a situation where having not paid attention to the wholesale market which as I said up until 2012 was producing very stable prices, pretty slowly began to get pretty rocky.”
In fact, Mr Woods likened politicians’ complaints about energy prices to a child whinging that its toy is broken after having thrown it repeatedly down a staircase.