A few semi-organised thoughts for anyone with the patience to read them ...
-----------------
I've yet to see clearly argued (to my satisfaction) why the grid/poles/wires business needs to be privatised. I see no impediment to privatising its upkeep, but that's a different matter. We do that with much of our military equipment and facilities without suggestion that the assets should be in private ownership (well, not without hysterical laughter from 99% of the audience on the rare occasions that it happens). There are many contract options, including long-term multi-year arrangements, that can deliver value-for-money and retain public asset ownership. Defence has about 50 asset groups, each managed from offices with ~20-70 staff (the newer the capability, the leaner the management, generally speaking) with the vast majority of the work done in the private sector. That's getting up toward the order of $100 billion in assets with ~2500 public-sector staff (with the rest of the 6500-total DMO workforce in enabling areas and new projects). I expect the grid/poles/wires business would be leaner, if it's done right, but it isn't at the moment. Energex, for example, operating in SEQ, has 3,000 employees alone, but it does much (all?) work in-house. I don't doubt that poles/wires maintenance could be better done, but I don't see how privatisation of assets will deliver that result.
Generally, I don't believe that privatisation of a natural and actual monopoly is in the public interest (although there may be an example somewhere). I don't believe selling Telstra's network assets was right, either. Privatise the upkeep, sure, with carefully structured contracts, clever payment incentives and diligent contract management, but don't sell the assets. Mind you, we got into a heck of a mess with duplicate HFC networks in some areas, none in others and a mix of over- and under-serviced regions. I won't try and make the case that Telecom/Telstra has ever done a superlative job at planning and managing the copper and HFC networks.
Power generators, on the other hand, can be privatised left and right without issue. In fact, I'd say that's optimum. Generation technology changes at a much faster rate than transmission technology (with serious cost implications) and it looks to me like a natural fit for market/private enterprise mechanisms. The part of the grid from generator site to feed-in point can be theirs, too - no problem there.
The current pricing model, that dominates retail prices, includes the problematic 10%-on-cost component for grid maintenance/upgrades, AFAIK. Somebody, somewhere should be feeling guilty that they signed up to that. But it mystifies me that, rather than revisit contract and pricing models, or even standards and independent audits, privatisation of assets is suggested instead. Our leaders seem to want to over-simplify the problem, and therefore apply an overly-simplistic, flawed solution. Or maybe they're just driven by budget numbers and to hell with long-term solutions. The network business actually delivers a profit to Government as it is - it's not losing money.
As for retailers, right now, we could conceivably do without them - just add the network cost component and percentage markup to wholesale prices for the generators, which is kinda what we do already. We basically swapped councils for a mix of public and private retailers without changing much else. The retailers are probably too constrained and I think we'd benefit from more competition in that sector. There's a small efficiency in having private retailers - they can "bundle" prices based on usage/demand and are free to create innovative supply contracts (although they don't right now) - but their real value is in dealing with the generators and the base/spot markets so you, the consumer, don't have to. For that reason, I think centrally-regulated time-based network charges are a slap in the face as they relieve the retailers, network operators and generators of organising themsleves and offering incentives to best meet or modify consumer demand. Time-based charges are fine, but only so long as they reflect actual costs, there is competition amongst retailers to offer a variety of solutions and consumers have free choice amongst retailers.
Regulation in the sector seems patchwork and half-arsed. I think it could do with a top-down overhaul. But selling monopoly assets is not the answer, IMHO.
On a related point, as I recently read, there continues to be strong growth in micro-generation (mostly solar), with the point of generation generally moving closer to the point of consumption. The long-distance HV network is of decreasing relevance in that environment, but will still be needed. I don't think the recent investments are completely wasted as de-rating is one way of extending asset life (which is to say that upgrading without increasing load achieves the same effect).
Quote:
|
Originally Posted by AndreJ
as they were only doing non compliant driveways for one supplier
|
I've seen similar stuff ups around my place, but I don't understand the supplier angle. Did they mean retailer? Surely the poles/wires in your area are all operated by the same entity?
The surveys these people do are haphazard - I've seen it myself. There doesn't seem to be any real quality control. I can go back to the military example I began with and say that heads would roll if military asset management were that disorganised.