Industry should take some blame for energy crisis: ACCC chief Rod Sims

Regulator Rod Sims stands firm as to who is to blame for energy crisis as industry group tells parties to stop arguing.

ACCC chief Rod Sims says blaming the government for the energy crisis is “simplistic” and a “deliberate diversion” from fixing the problems. Picture: Kym Smith.

Regulator Rod Sims has backed government claims that the energy industry should take some of the blame for the crisis of affordability and reliability, but the Ai Group says political party backbiting and emissions target uncertainty has been “poisonous” for the sector.

In a speech in Sydney this morning, Mr Sims, the chairman of the Australian Competition and Consumer Commission, dismissed claims that a settled energy and emissions policy could fix problems in the electricity market.

He also backed the government’s underwriting of new generation investments to help break down entrenched concentration in the electricity industry.

Mr Sims said blaming the government for the energy crisis was a “simplistic and sometimes deliberate diversion” from fixing the problems.

“Industry must shoulder an important part of the blame for where we are now,” he said.

Electricity prices have increased by 50 per cent in the past decade and Mr Sims said this had sparked a debate about the mix of generation and the need for more investment.

“Some argue that if we had a settled emissions reduction policy, or implemented the emissions reduction element of the National Energy Guarantee (NEG), that it would have solved the affordability problem.”

“This is simply not so.”

“Even if we solve the wholesale market’s reliability and emissions issues tomorrow, we will still face serious electricity affordability issues.”

Schemes and subsidies

He blamed a range of factors including rooftop solar schemes that forced all consumers to subsidise private investments, high network charges and the loss of the Hazelwood and Northern coal fired power stations for pushing up prices.

“Network and distribution costs increased largely because the network businesses pushed for, and achieved, looser regulation around 10 years ago,” he said.

He said state government’s should follow Queensland’s lead and take the costs of the solar subsidies onto their budgets. He urged a cut to the value of network assets, whose returns are the largest single component of a household electricity bill.

Calls for consensus

Meanwhile, the Australian Industry Group has welcomed Labor frontbencher Joel Fitzgibbon’s calls for a “sensible settlement” on climate change, declaring the opposition’s adoption of the Morrison government’s 2030 emissions reduction target would be “extremely helpful”.

Ai Group chief executive Innes Willox told The Australian on Thursday “deep uncertainty” over emissions targets had been “poisonous” for the energy sector, leading to an investment “drought”.

“Political consensus on sound policies for a successful long-term transition to net zero emissions would be extremely helpful,” Mr Willox said.

“The specific form and force of climate policy facing a new power project over its life can make a huge difference, and deep uncertainty over this is poisonous to the investments we need to build a new energy advantage.”

But Mr Willox cautioned current targets needed to be extended beyond 2030 and called on the Morrison government to fall in line with the states and territories by aiming for net zero emissions by 2050.

“Consensus needs to go beyond 2030, which is closer than it sounds, and beyond the federal parliament. Electricity generators and other major industrial assets last for decades,” Mr Willox said. “All Australia’s states and territories now aim for net zero emissions by 2050 and are ramping up their own policies.”

“The federal government has also committed to pursue global net zero emissions through the Paris Agreement, policies should be scalable so if targets rise, the same policies should be able to deliver.”

Create coherent national strategy

Mr Willox urged the major parties to stop “backbiting” and called on them to create a coherent national strategy to help boost investment.

“A coherent, efficient and nationally concerted strategy around this could achieve much more than fragmentation and backbiting,” Mr Willox said.

It comes as Mr Fitzgibbon used a speech at a Sydney Institute event on Wednesday to call for his party to adopt the Morrison government’s 2030 climate change targets, arguing the opposition “confused and scared” voters with its policies at the May election.

Mr Fitzgibbon has said the policy shift would lift the party’s support in working-class and regional areas.

Opposition climate change spokesman Mark Butler has ruled out using the government’s climate change targets.

Mr Butler said Labor should not make any major decisions on its climate change policies while its internal review is underway and that any future policy changes must remain consistent with the Paris targets.