Labor’s peak demand failure drives up power prices

The power prices increases announced today are much worse than they needed
to be because of the Bracks/Brumby Government’s delays in taking action to
enable consumers to reduce their demand for electricity at times of peak
power demand.

It is high levels of demand for electricity at peak times such as hot
summer afternoons that are producing huge spikes in electricity prices,
raising the wholesale price from around $40 MW/h to up to $10,000 MW/h.

Lack of water due to the drought means that far less hydro-electric power
is available to meet that peak demand, driving prices far higher than they
would otherwise be.

These extraordinarily high prices at peak times are dragging up the average
price, resulting in the price increases of up to 17.6% that will hit
Victorian consumers from 1 January.

The Bracks/Brumby Government has been talking for years about reducing peak
demand, but has done very little. In 2002, the government said:

“Demand side management (DSM) includes peak demand reduction, energy
efficiency, and the use of cogeneration and standby supplies. It can
contribute to supply security by reducing the size of Victoria’s peak and
overall demands.

“The Government has given a statutory role to VENCorp to facilitate demand
management.” (Source: Energy For Victoria p. 16)

However, the Government scrapped VENCorp’s demand management role earlier
this year after years of inaction.

Particularly damaging has been the Bracks/Brumby government’s failure to
roll out interval meters, or smart meters, which would allow retailers to
offer lower prices to consumers who reduced their use of peak demand
electricity. Use of interval meters was initiated by the Kennett
Government and endorsed by the Bracks/Brumby government, but the rollout
has been delayed for years.

In 2004, the Government said the rollout was expected to begin in 2006.
However, the government is now saying the rollout will occur between 2008
and 2012.

In May this year, Minister Batchelor told the all-party Public Accounts and
Estimates Committee that: “I would be surprised – I would be disappointed
– if price increases in Victoria got into double-digit figures…”
(Hearing, 16 May, 2007, p.4) All Victorians are entitled to be
disappointed in the Bracks/Brumby government that they have now been hit
with massive price increases despite the Minister’s assurances.