- ELECTRICITY SUPPLY -

Garnaut report has shocked energy generators and energy intensive industries - because of its aggressive approach to greenhouse gas reduction. He also called for construction of infrastructure to connect renewable wind and geothermal plants to grid. This was seen to be needed because of urgency of global warming, and the unusually large threat it poses to Australia. He rejected the idea that generators and others with assets stranded by the changes should receive compensation. National Generator's Forum (John Boshier) suggested that report reflected ignorance of how electricity sector works and the importance of a reliable electricity supply - which would no longer be assured. Australian Conservation Foundation (Tony Mohr) argues that power industry should have been aware of what was coming for 10 years. Garnaut argues that it is vital to get a good emissions' trading scheme - and easy to make mistakes. (Breusch J, 'Emissions report shocks power sector', FR, 22/2/08).

Electricity generators are concerned that they would be excluded from compensation for in a national emissions trading scheme - and could be left with $bns of stranded assets (Warren M 'Power companies fired up about compensation', A, 22/2/08).

Queensland's power supplies could soon be interrupted - leading to brown-outs - because of water shortages (Madigan M 'Drought could put homes in the dark', CM, 21/5/07).

Many executives of Energex are under investigation for conflict of interest in relation to purchasing shares in rival companies (Houghton D 'Darkness descends on GOCs', CM, 18-19/11/06).

State are being pressures by COAG advisory group to break-up and privatise their electricity assets (Hepworth A 'States pushed to sell energy assets', FR, 17/11/06).

Queensland's two major electricity retailers are under pressure because of massive population growth and increased customer demands. Despite a $bn program to upgrade networks Ergon has been unable to meet infrastructure targets and struggles to deliver projects on time. The large scale of the capital program has created its own problems - eg in finding sites (Chalmers E etal 'Running out of power', CM, 31/10/06).

Purchases of 'green' electric power by Queensland Government appears to have been a sham (Hughtton D 'Sparks fly over power', CM, 29-30/7/06).

There is now recognition that Queensland will face a new power crisis unless water is quickly found for power stations. The government's planning ability is questionable. The electricity problem is the third major strand to unravel in the governments vaunted 25 year SEQ regional plan. The first problem came with announcements of much greater than expected population projections. Then Urban Development Institute suggested that land requirements had been under-estimated so prices would rise and property become unaffordable. The need for new dams was also not mentioned in the infrastructure plan. Then there were extraordinary cabinet meetings to announce an investigation of obtaining water from North Queensland (Coates S 'We're in deep water, premier', CM, 27/7/06).

Proposal to privatize Queensland's electricity retailers is a minimalist approach to reform. There is a case for government ownership of transmission and distribution (as these are monopoly services) but reasons for retaining generation are unclear. Either government doesn't fully understand the situation, or policy is being dictated by interest groups (Christensen M 'Circuit breaker', CM, 28/4/06).

Queensland is likely to sell its two electricity retailers (Energex and Eron) but keep control of its three generators (Wisenthal S 'Qld to sell energy retailers but keep generators', FR, 26/4/06).

Queensland Government is now committed to opening its major electricity businesses (Energex and Ergon) to full retail competition - but has determined not to sell off power lines business. Government is creating expectation for possible sale of retail businesses. However generation is key issue - as for 10 years from 1990 the state built only one major power station - and precarious position was revealed when electricity market started in 1998. Shortages were revealed in wholesale prices double those in southern states. Since then 2100MW of generating capacity has been added (2/3 of new capacity Australia wide). This partly involved encouraging private generation investment. After investing Shell felt investment had turned sour - and sold down its interest. The problem was unexpected building of new generating capacity - by government on non-commercial terms. Production growth is outstripping demand. Energy Minister says he wants 25% surplus generating capacity - which results in collapse in prices / margins. Better prices in NSW encourage completion of interstate transmission capacity - though this would eliminate justification of 25% surplus capacity as it would not ensure that surplus to be available for Queensland. Also loss of investor profit has left them unwilling to invest further - thus requiring all further generating investment to be state funded. Government would then be trapped in managing an industry that (unlike transmission) does not have monopoly characteristics). Politicians posturing in electricity markets brings risks of instability - and must be ended (Moran Alan, IPA, 'Gridlock?', CM, 14/3/06).

Queensland Government is now committed to opening its major electricity businesses (Energex and Ergon) to full retail competition - but has determined not to sell off power lines business. Government is creating expectation for possible sale of retail businesses. However generation is key issue - as for 10 years from 1990 the state built only one major power station - and precarious position was revealed when electricity market started in 1998. Shortages were revealed in wholesale prices double those in southern states. Since then 2100MW of generating capacity has been added (2/3 of new capacity Australia wide). This partly involved encouraging private generation investment. After investing Shell felt investment had turned sour - and sold down its interest. The problem was unexpected building of new generating capacity - by government on non-commercial terms. Production growth is outstripping demand. Energy Minister says he wants 25% surplus generating capacity - which results in collapse in prices / margins. Better prices in NSW encourage completion of interstate transmission capacity - though this would eliminate justification of 25% surplus capacity as it would not ensure that surplus to be available for Queensland. Also loss of investor profit has left them unwilling to invest further - thus requiring all further generating investment to be state funded. Government would then be trapped in managing an industry that (unlike transmission) does not have monopoly characteristics). Politicians posturing in electricity markets brings risks of instability - and must be ended (Moran Alan, IPA, 'Gridlock?', CM, 14/3/06).

As full retail contestability emerges fro electricity supplies, Queensland Government will investigate sale of its electricity assets - other than distribution systems (Owen R 'Beattie Government gears up for sale of electricity assets', CM, 1/3/06).

Queensland electricity assets are being reviewed for privatization ('Shakeup for power assets, CM, 16/1/06).

Queensland's power corporations have fallen behind on projects designed to protect against summer blackouts (Cole M 'Blackout fears as projects hit snags', CM, 30/12/05).

A power plant touted by Queensland government as pioneering renewable energy has emerged as a flop. The Rocky point cogeneration plant cost $60m and is now valued at $7.5m (Johnstone C 'Green power plant a lemon', CM, 17/11/05).

Origin energy may be able to develop a gas fired power station in Townsville ahead of rival AGL - which is seeking to build a station by 2009 fuelled by PNG gas. This leaves north Queensland at risk if pipeline is delayed. Enertrade was also planning a station - but gave up when AGL announced its plan (Wisenthal S 'Energy companies jostle for power in Queensland', FR, 14/11/05).

Queensland Government plans to merge Ergon and Energex at the same time it allows retail competition (Wisenthal S 'Qld plays it both ways over energy', FR, 31/10/05).

State government left door open to sell off of electricity assets after announcing sweeping review of industry in mini-budget. Complete deregulation of electricity and gas market is likely by 2007 (Johnstone C., 'Option of power sell-off left open', CM, 26/10/05).

Queensland plans to merge its two big power utilities (Ergon and Energex) as it considers floating its energy retail business (Wisenthal S etal 'Beattie powers up $6bn energy merger', FR, 21/10/05).

Full retail contestability for electricity in Queensland is an encouraging sign, but it raises the question of whether Energex and Ergon should be public companies at all (Christensen M 'Time to embrace energy reform', CM, 3/10/05).

Interstate experience does not suggest that retail price competition for electricity will result in reduced charges. Consumers will face choices that are just as hard to assess as for phone companies (Guthrie F 'Competition or confusion?', CM, 30/9/05).

Queensland Government will open retail electricity sector to interstate competitors from mid 2007. Cost of opening the market is currently estimated as $55m over 5 years (Ludlow M etal 'Competition to enlighten Qld', FR, 29/9/05).

Though the fallout from Dr Death affair is the focus of attention in Queensland, problems associated with power network that led to Energex scandal continue to be a problem as state struggles to cope with rapid population growth. Energex is spending 80% of its capital works on connecting new customers, rather than upgrading existing power distribution network. There could be major problems for the electricity network if the state experiences a normal storm season - as last years was much milder than normal (Ludlow M 'Energy crisis is just a storm away', FR, 19/9/05).

Government will provide a significant increase in subsidies for electricity supply in the bush as it considers releasing the monopoly which Energex and Ergon have on power supply (Johnstone C 'Power monopoly under threat', CM, 8/6/05).

Queensland's biggest electricity distribution companies have been approved to spend $8bn to upgrade their distribution networks by QCA. This is major change, as last December a lower minimum investment was recommended - and could pressure regulators elsewhere to approve capital expenditure. Electricity Companies claim investment is needed, while regulators have been concerned that utilities pocket some money allocated for capital spending, under-invest to increase returns to investors while charging consumers more (Hepworth A 'Green light for $8bn energy spree', FR, 29/4/05).

Queensland premier has pressured QCA (which recently increased allowed rate of return on Dalrymple Bay Coal Loader) to also consider return on capital starved electricity distribution network (Owen R 'Beattie tugs watchdog's lead',  CM, 26/4/05).

Review of Queensland's power needs suggests that (contrary to earlier opinion) there may be a need for additional generating capacity because of massive demand growth expected (Ludlow M., 'Qld may need to lift power generation', FR, 11/3/05).

Queensland government is being pushed around over Energex - with large payments to ex manager's family, and large pay rises for workers ('Power appears to have gone to the head of Beattie government', CM, 5/2/05).

Queensland's government-owned power distributors (Energex and Ergon) have announced $6bn investment program. Opposition suggests that this is catch-up spending because so little has been spend - due to dividend stripping - in the past (Wisenthal S 'Queensland energy plans criticized', FR, 22/12/04).

Auditor General has revealed an elaborate scheme to pay ex Energex Chief an additional $199,000 pa (Walker J etal 'Power boss salary jump exposed', CM, 17/12/04).

Energex has been accused of lying to consumers about the ability of the power network to provide supplies. Blackouts were in stark contrast to positive spin which Energex placed on situation (Franklin M. 'Energex accused of lying', CM, 16/12/04).

Energex is a massive organization which requires skilled management - yet party hacks and cronies have been employed for years. It can't be run on the cheap - and current problems are the result of false economies. There seems to be a culture of corporate indulgence. The former GM moved in a world of mates, political cronies, fickle friendships, extraordinary generosity and wink-and-nod accountability (Sweetman T., 'Culture shock', CM, 10/12/04)

Government is endeavouring to rewrite history of Energex case, by claiming they acted promptly on Energex warnings about the system. But senior ministers rejected criticism of network in 2003; claimed summer blackouts were only caused by storms; went to election without power network concerns; and only commissioned investigations afterwards. Then Treasurer predicted that review would find little - when in fact it was devastating. Premier and Treasurer then said they had not known of problems - though there had been warnings of problems in 2003 to bureaucrats and minister's offices. The Treasurer claims not to have seen this - though his reputation is for a very 'hands-on' style (Parnell S. 'Lots of energy expended doing nothing', CM, 25/11/04).

States will strip $1.88bn from their power utilities as dividends and taxes this year - giving rise to concerns that they will be left short of cash for system maintenance and upgrades (Hepworth A 'States under fire over power', FR, 8/11/04).

Problems in the quality of Australia's electricity supplies are causing problems for industry (Hepworth A., 'Continuous threat of energy cuts', FR, 8/11/04).

Queensland could face widespread blackouts in coming storm season - according to Energex CEO (Roberts G. Storm blackout warning', A, 3/11/04).

Queensland Government was accused of deception when profit results for its power companies were released just before Melbourne Cup. Those reports showed that power companies (who faced major problems in keeping up with demands on energy network) had budgeted to pass 95% of their profits to state government. ('Beattie accused on power reports', A, 2/11/04).

A report to parliament has revealed the extent of problems which storms have caused for Energex's network. It also reveals proposed increased dividend to Treasury - which Opposition suggests should be spent on network development (Odgers R etal 'Light shed on extent of Energex's problems', CM, 2/11/04)

Energex has told QCA that it risks placing network under more pressure by using outdated growth figures as it reviews regulatory arrangements (Owen R 'Energex warns of data short circuit', CM, 1/11/04)

Energex's program to clear trees from power lines before storm season has been seen to be impractical - because the problem has arisen from years of neglect (Weston P. 'Storm brews for tree cutting plan', SM, 31/10/04)

ETU is amused that Energex is seeking to recruit hundreds of staff by Christmas - as previous policy had just been to cut. The problem (from obsolete substation system to call centre delays) are the result of 10 years of underfunding - according to Sommerville report. While progress is being made, the problem can't be overcome quickly. ETU doubts that system will be able to cope if weather problems like last year re-occur. There is an international shortage of skilled power workers - and ETU does not know where Energex will get the staff it needs. Energex's problem was that everything had been downsized. The problem went beyond lack of maintenance / investment, and included failure of systems, processes and people. Energex briefing note on expected power problems illustrates the difficulty. It noted that air-conditioner use had increased demand well above expectations and that the system could not cope. Government struggles to explain why such a critical document was not shown to a minister. If this was a bureaucratic lapse it was convenient for government before election. (Walker J. 'Power without glory', CM, 2/10/04).

Premier summoned Energex Board members excluding Chairman to meeting and announced that there was a Treasury report critical of way Chairman had arranged payments for house renovations for CEO - who had been guaranteed that he would not be financially disadvantaged by moving. In resigning, chairman accused premier of deliberately leaking report on this issue to deflect criticism over state's electricity crisis. The Labor mates network (which had included Energex chairman and others) was very concerned that premier had made scapegoat of others. Chairman had been close friend of Treasurer, the ALP's Labor Unity faction heavyweight who was also close to Office of Energy Head (Scott Flavell) and his wife (who had previously headed the Office). Another Energex director who was also close to Treasurer is a partner in Sciacca Lawyers - the firm of a federal ALP senator which had provided legal advice to Energex. Treasury report had suggested that arrangements with Energex chairman should be investigated by ASIC - Crown Solicitor stated (without giving reasons) that matter would best be left to government to handle. Also briefing note on potential energy problems had been sent from Energex to Office of Energy in August 2003 - which premier insists was not seen by Treasurer or Energy minister. Opposition claims this is unreal - and the public must be made aware what drove Energex CEO to commit suicide. They suggested that government had started investigation of CEO in retaliation for his raising concerns about government actions after they had been advised of impact on power network of their dividend raids on Energex. (Roberts G 'Sunshine mates under a cloud', A, 2-3/10/04).

Former chairman of Energex claims to have accused state government of leaking information about investigation of ex CEO's expenses to media. Premier denies that any such discussion took place - and has labeled the suggestion (which implies that he lied to parliament about the matter) as defamatory (Koch T etal 'Ex-power boss in attack on Beattie', A, 2-3/10/04).

Dumping of chairman of Energex (Don Nissen), a close friend of present Treasurer, for alleged breaches of duties in relation to CEO would damage Government's relationship with business. A former ALP Treasurer saw this as evidence of a lack of loyalty at present time (Wilson N., 'Beattie rift with mates on Energex', A, 30/9/04)

In early days of NCP power industry was seen to be inefficient - and a drag in terms of international competitiveness. However this reform led to major blunders as well as lower wholesale electricity prices. Main issue is that politicians still call the shots - especially where industry was corporatised (theoretically to gain benefits of private sector management and public ownership). The clash of direction this created is source of Queensland's electricity crisis. Initially corporatisation was seen as a way to increase revenue - while competition was not allowed. NSW taxpayers lost $800m when corporatised electricity entities undertook to sell electricity to Victoria at below generation cost. Management attempts to break up Western Power were blocked in parliament. The corporatisation model has not benefited the governments that adopted it (Wilson N 'Power industry shackled by politicians with other agendas', A, 30/9/04)

Premier has been accused of whitewash for refusing to call independent inquiry into death of Energex CEO who had wared government last year of collapse of power network (Ludlow etal 'Beattie slated as Maddock cleared', FR, 29/9/04)

Energex was formed in July 1997 as part of Queensland contribution to NCP. It took over activities of SEQEB which had an excellent reputation in power industry. Margaret Beardlow (Benchmark Economics - electricity industry consultants) argues NCP principles applied to electricity industry were misguided. The view 15 years ago was that electricity industry was inefficient. This was ill-informed - and effect of change has been to reduce investment / maintenance as utilities were used as cash cows and costs to consumers were kept artificially low. In 2001-02 and 2002-03 Energex had to borrow against future expectations to pay dividends to government. In 1997-98 Powerlink had to increase its borrowings by 90% to pay $249 interest free loan to government. Similar transactions involving $150m occurred in 1999-2000 - which led Powerlink to buy back $150m of its ordinary shares from government to offset the loan. Since 1996 more than $5.2bn in equity has been paid to NSW Government by electricity trading enterprises. The days of cutting expenditure to the bone can not continue. Opposition criticism of government for raiding electricity corporations lacks credibility, as it started the process. (Roberts G etal 'Powerless despite profits', A, 28/9/04).

The report into Queensland's electricity industry (Electricity Distribution and Service Delivery) has been described as presenting a view of an industry in decay - and that total blackouts are likely. This is untrue - and commentators have clearly only read parts of report. Panel did not find network was total mess, or that distributors were short of funds because of excessive government dividends. It did find shortcomings in Ergon and Energex networks and that there were problems in regulatory framework they were subjected to. It recommended: clear service standards; and that determination process by Queensland Competition Authority should be amended. Current revenue capping approach works well in low demand growth periods, but needs to be modified during high growth. State of network regarding Ergon is clear. It inherited 5 networks several years ago and had to guess how much needed to be spent. Now it knows more is needed - and appropriate arrangements have been made (though perhaps too slowly). Energex embarked on deliberate strategy in late 1980s to increase efficiency by running assets at higher capacity, and reducing spending. This reduced spare capacity combined with shift from winter peak to extended summer peak caused Energex to conclude that needed to change - and the panel agreed. Increased expenditure is thus needed. However Energex's performance is good by Australian averages. Some of panel's recommendations have been implemented - but more work remains  (Somerville D. 'Electricity we can rely on', CM, 3/9/04)

Premier has embroiled head of independent electricity review in energy furore to help clear government. Premier seized on remarks by Chairman of inquiry that, despite $2.7bn repair bill, the energy network was not in crisis or in a state of decay. (Wardill S and Odgers R. 'Beattie still trying to pass the buck', CM, 2/9/04)

The Premier over-ruled his new energy minister who had wanted the heads of Energex and Ergon to brief the Opposition on progress in the electricity network - on the grounds that they (as 'public servants') should not be involved in political controversy. (Odgers R 'Opposition in the dark as Beattie overrules minister', CM, 31/8/04)

Business will get priority in blackouts (Parnell S etal CM, 28/8/04)

Queensland's new energy minister blocked Energex's plans for dealing with electricity crisis (involving PR briefings to ministers and business) (Odgers R 'PR plan for power axed', CM, 27/8/04)

Scott Flavell (who replaced his wife and fellow ALP member as state's chief energy bureaucrat) is former Executive Director of Office of Energy and worked on energy issues in Treasury. But while he knows the issues well, the fact that he is also politically active creates risks for government. Flavell is aligned with government that has politicized boards of GOCs - and now faces a crisis that requires hard decisions. Government has promised full cost-benefit analysis of full retail competition. There is also a need to overcome the Treasury view of electricity corporations as cash cows - which encouraged them to simply cut costs to boost government finance rather than pursuing real goals of corporatisation (ie innovation and competition) (Johnstone C., 'Will the switch work', CM, 25/8/04)

Queensland appointed separate energy minister and injected $200m into state power companies to fast track capital works (Ludlow M 'Beattie applies extra cash, new face to energy ills', FR, 24/8/04).

Woman in charge of government office which monitor's electricity reform is to be replaced by her husband. Both are members of same Labor faction as Premier and Treasurer - and the move has been labeled as cronyistic by Opposition. Cronyism in appointment to electricity boards was seen as part of problem, and now this has extended to public service. (Wardill S 'Job shuffle attacked as cronyism', CM, 24/8/04)

Queensland Government will increase workforce in electricity distribution companies by 10% and consider scheme to compensate those affected by blackouts and penalize electricity companies if they do not meet minimum service standards (Ludlow M 'Beattie tries manpower to stop blackouts' FR, 23/8/04)

Electricity consumers will receive compensation in the event of a blackout - under new rebate scheme (Giles D 'Compo plan for blackout victims', SM, 22/8/04)

Queensland's Auditor General has rebutted claims that official audits showed that the government had not taken excessive dividends from electricity companies. AG's audits merely check whether figures add up, and are compatible with legislation. They are not performance audits. (Wardill S 'Sparks fly as Beattie's audit claims dismissed', CM, 20/8/04)

Government will commission independent audit in November 2004 to ensure plans for dealing with network deficiencies are on track (Ludlow M 'Jobs on line if power fails: Beattie', FR, 18/8/04)

Government needs to explain why an explosion disabling electricity system in NSW had its worst effect (in terms of blackouts) in Queensland ('Queensland deserves answers', CM, editorial, 18/8/04)

Queensland has a looming energy crisis - and the Beattie government is either in denial or offering vague fixes. Energy experts and businesspeople (unlike government) see problem as real threat to state economy. Electricity consultant (Robin Russel) called for end of fat bonuses for electricity company executives for slashing maintenance programs to meet short term profit goals. There must be long term accountability. Other experts seek reform of GOCs and of politically appointed boards that run them. Previous boards had expertise, and would have heard the rumblings. GOCs do not take responsibility seriously. They are neither accountable as public entities nor as private entities. Directors are chosen for political purposes, not their effectiveness, expertise or leadership (according to Tom Potter, CEO Eagle Boys pizza). Energy Consultant (Warwick Powell) suggested that selection process for GOC directors was very partisan - and support by 2/3 of parliamentary body should be needed. A bipartisan committee also needed to set dividends at reasonable levels. (Thompson T., 'System needs reform - here's how to fix it', CM, 7/8/04)

Queensland's electricity supply system has been reduced to third world status (with blackouts) by years of neglect. A government report on Energex and Ergon was very critical.  Allegations ascribe the problem to a combination of incompetence, cronyism and greed. Report found distributors could not meet current power demands, let alone burgeoning population growth. It points to deficiences in manpower. Opposition blames problems on money government has extracted to support budget. Productivity Commission figures suggest that Queensland takes more from electricity system than other states. Opposition points to 'government mates on boards (Roberts G 'Power to the people', WA, 7-8/8/04)

Premier says that bad decisions on power were taken before his Government came to power - and that he was unaware of massive under-investment that was revealed in Somerville report. His mistake was not to have asked the right questions - and this is all he accepts responsibility for. Somerville report put some blame on 1989 decisions to work assets harder. But Beattie faces problems because his government forced power companies to keep paying dividends with money needed for network maintenance. Various governments had gambled on running down network capacity. Queensland generates more than enough power - but can't deliver it. Thunderstorms revealed the problem - yet Energex and Ergon were slow to respond prompting government to launch independent inquiry. (Ludlow M 'Power ploys blackball Beattie Government', FR, 6/8/04)

Previously censored documents show that Energex board had complained that government cash raids could impede maintenance and capital programs, or even threaten solvency - claims that government rejects (Wardill S etal 'Energex cash plea', CM, 6/8/04)

Premier warns other states they face same power crisis as Queensland if they neglect maintenance standards while conducting other reforms (Ludlow M 'Beattie rings alarm bells', FR, 5/8/04).

Over 50% of directors of Queensland energy companies have not completed comprehensive training courses to understand their duties, responsibilities and ethics. The selection and appointment process to such boards has been neglected and politicized (according to Company Director's Queensland Manager, Richard Moore). The Boards of GOCs have 21 politically appointed from range of professions, with only one engineer. Law does not require Energex and Ergon directors to take AICD training course. AICD division president (Jane Wilson) suggested that it was unlikely that boards were composed on labor cronies rather than appointments based on qualifications.  (Thompson T and Wardill S 'Energy officials short circuit training', CM, 4/8/04)

The electricity supply industry used to be run by engineers who concentrated on technical aspects to ensure that power was available. This did not always result in perfect outcomes (for many reasons including political interference). Then economic rationalists convinced governments that the electricity industry should be profitable - so engineers were replaced by economists and accountants - where were not interested in technical aspects of supplying power. The industry will not stabilize until politicians cease meddling in things that are too complex for them to understand (Francey A 'Let professionals light way forward', CM, letter 4/8/04)

Queensland's image as a good place to do business will be harmed unless power grid upgrade is carried out promptly. Problems were highlighted by National Retail Association (Pat Mckendry). AIG said much more severe power problems would be needed to discourage business. Agforce saw power suppliers as vital, while Property Council members had not real concerns (Marx A 'Business to monitor upgrading of power', CM, 4/8/04)

Premier has defended colleagues amid electricity network crisis - arguing that no one can anticipate every departmental problem. He argues that the role of good government is to identify problems and fix them. Review found that Energex and Ergon were not coping with current demand - quite apart from future growth, and regulatory measures were not taken to protect consumers interests. (Parnell S. 'Premier's men insulated from blame', CM, 2/8/04)

Buying high powered air-conditioners has been identified as a major cause of Queensland's power crisis (Ludlow M 'Air sissies spark Qld power crisis', 31/7-1/8/04)

Beattie Government's claims to be part of the solution to electricity crisis are not generating confidence as they were a big part of the problem. Energex got into trouble with decision to work assets harder 15 years ago - which delivered $1bn return to government. The culture in GOCs generally may be the main problem. Ex chief executive of Tarong Energy described boards as 'feudal hierarchies' that paid no more than lip service to governance. All that was done was tick the boxes.  Problem is that management of $20bn in public assets had no independent oversight. Somerville inquiry terms of reference did not cover whether there was anything wrong with legislated standards that GOCs have to meet. Only Auditor General can comment on that. otherwise everything is at discretion of boards - who, the Act requires, have to perform their functions in a proper, effective and efficient way (a requirement that seems to mean little) (Johnstone C 'There're not exactly generating confidence', CM, 31/7/04)

Most of the directors on the boards of government owned electricity distribution corporations are ALP members, stalwarts, sympathizers or mates (McCullocgh J 'Old Labor mates are sharing the power', CM, 31/7/04)

Queensland's largest private power supplier (Intergen) threatened to scrap development plans - because of concern about the investment climate 9eg due to recent government investment decisions). Premier agreed that some past energy ministers had not done a good job and that some executives remained in their jobs only to improve system by summer. Premier blamed NCP and lack of technical advice for problems in industry - though others pointed out that such advice had been given. Intergen has $2bn invested in coal plants (Millmerran and Biloela) and has looked at other options. It is the only private base-load electricity generator. Other base-load generators are Tarong and Stanwell (both government owned). Intergen is concerned about state decision that CS Energy should build Kogan Creek power station - which overbuilt power generation (Walker J and Wardill S 'Power giant threatens to pull the plug', CM, 31/7/04)

Premier accepted personal responsibility for electricity crisis - as two ministers made contradictory statements about whether buying power from high rise building generators was connected with solving supply problem (Wardill S and Odgers R 'Take a cold shower', CM, 30/7/04)

Energex and Ergon should have engineers who know a little about the industry on the board - but do not - and lack of skills could be the cause of the crisis (Petter R) With one exception there is no one on boards of electricity companies with experience, expertise or education relevant to maintenance or planning. Economists and lawyers may be good on the profit side, but good service requires technical expertise (Austin G)  (Power board make-up is critical, CM, letters to editor 30/7/04)

Private electricity generators will be conscripted to boost Queensland's struggling electricity network, and unpaid and untrained volunteers will be recruited in hospital to help manage long waiting queues in public hospitals (Griffith C, Parnell S and Wardill S 'Why don't you fix it yourselves?', CM, 29/7/04)

The state government can not claim to have been unaware that not enough was being spent to maintain / develop the electricity network (as a recent report has proven) because the opposition kept claiming that this was a problem, and ministers kept denying it. There needs to be independently determined minimum maintenance standards before returns from GOCs are paid to government. At present boards have to pay ever greater profits to government - consumers come second. There is a need for oversight of delivery by a parliamentary committee. But why do power companies need to make profits, they exist to provide services not as cash cows for government. But governments now are unwilling to raise taxes, so they charge more for services. In Queensland taxpayers subsidize petrol, but what is the point if this can only be achieved by overcharging for power. The government has a lot of work do do, as it has been caught asleep at the wheel (Franklin M. 'Avarice leaves public in the dark', CM, 28/7/04)

Queensland premier has become famous for blaming someone else when denials are shown to be flawed. ESSA (the industry association) has been warning government for years that demand in SE was growing rapidly and putting pressure on supplies. But premier has been in denial. Opposition argued that problem was special dividends government took from electricity boards. Productivity Commission showed payments from Energex and Ergon of $1.1bn since 1989-99. Electricity Distribution and service Delivery Review supported government's view that thes was not cause of problem. It showed that large parts of distribution network were built after WWII with 40-50 year life - and now need to be replaced / upgraded. It also pointed out that introducing competition was a major change - though Queensland did not allow retail competition. Energex had focused too much on improving financial results. It has also invested in other areas - and Somerville report suggested it should stick to its knitting. (Wilson N 'Consumers pull the plug, Beattie has a blackout', A, 27/7/04)

In February 2004, there were ministerial assurances that Queensland was on track in upgrading electricity network - and would not face blackouts because of increasing demand (as much more electricity than needed is generated). Somerville report makes a mockery of this. Were ministers misled? Why did they not inquire into real state of play? This seems like situation (ie a lack of effective governance which led to resignations) in NAB. There are three long term public policy challenges raised by this situation (a) how to fund network upgrading - given revenues which only allow CPI increases (b) tariff reform and effective demand side management (c) more active role for government and parliament in over-seeing the operations of utilities (Powell W. 'Shed light on dark days', CM, 27/7/04)

Powerlink, which manages Queensland's transmission infrastructure, argues that $700m is required to upgrade its part of Queensland electricity network (Johnstone C. 'Power upgrade to cost $700m', CM, 26/7/04)

Government will force Energex and Ergon to abide by minimum power service standards to reduce incidence of power outages (Odgers R 'Power providers will be made to perform', CM, 26/7/04)

Premier promised a blank cheque to fix problems in Queensland's energy crisis - arguing that government owned power companies had allowed network to deteriorate until it could not meet demand (Giles D 'Beattie pledge on power crisis', SM, 25/7/04)

An independent review has found that government-owned power companies have allowed electricity network to deteriorate to a level where it can't meet current demand let alone future growth. Queensland faces a massive rebuilding program. Distributors have not had sufficient focus on service quality they deliver. In Energex's case this resulted on too much focus on improving financial results. Expenditure was reduced - but at the expense of network condition. It now operates at 76% of capacity - where prudent level is 60-65%. The extent of catch up spending is not estimated - but Ergon Energy will not have resources to meet its capital works program. Panel found that as early as 1989, Energex had decided to work assets harder - and take greater risk. Energex did not then monitor network utilization until 2001, under-estimated demand growth over the past two years and had inadequate capital expenditure. Panel suggested that (a) legislative and regulatory provisions had not been used to ensure inadequate supply (b) government special dividends were not the source of the problem (Parnell S. 'Power grid run into the ground', CM, 24/7/04)

Beattie Government has been accused of trying to cover its tracks after scrapping $100m cash raid on energy companies - which have had problems with failing infrastructure. This is seen as confirming that 'special dividends' should not have been taken from Energex and Ergon (Odgers R 'Beattie in energy damage control', CM, 27/2/04)

Premier's early February election delivered a second massive majority - and avoided problems such as reliability and affordability of electricity supply. Hubris is however a popular government's greatest threat. When electricity loads reached record levels - we were reminded of massive increases in generating capacity. Blackouts were blamed on storms. But system stability should have been expected, not something to brag about. Energex - Powerlink paper Network Limitations in Brisbane CBD argued that network was adequate for this year - though problems were possible in 2005-06. Recent power demands have led to blackouts and load shedding. SEQ can expect continued high temperatures - due to greenhouse effect. Air-conditioning installation is reason for network limitations. Energex is encouraging this. Government sees electricity utilities as revenue sources. Existing tariffs do not reflect real cost of electricity- especially in peak periods. Uniform tariffs provide no incentive to conserve energy when it is most precious. Government needs to sign up to Kyoto protocol on global warming. Even though federal government has not recognised this, it is relevant to SEQ. Politicians need to not regard electricity utilities as revenue sources - eg by sale of utilities or by limiting dividends. Retail and distribution activities need to be better regulated. It is absurd that one half of Energex is selling air-conditioners, while the other half is struggling to maintain electricity supplies to them. Sustainable energy-efficient housing designs also need to be mandatory. Time-of-use tariffs should be introduced - to allow people to be responsible in use of power (Powell W. 'Power and the people', CM, 25/2/04)

Tropical storms in Brisbane have provided warning about need for electricity supplies. 400,000 people lost power. There is a question about how to deliver power: reliably; meeting increased demand; and at reasonable price. Over past decade government owned power utilities have been made into a series of corporatised entities. Yet Energex remains out of touch with consumer base (eg information about administration is unavailable; false advice was given about outages). The government blames problems on acts of God. But some argue that outages reflect risk management failure by Energex (eg in terms of removing trees, or putting lines underground). Under-grounding is estimated to cost several $bn. But the real problem is increasing power demand being delivered through aging network. Hundreds of millions have been spent on network upgrading. But there are big issues about fixed tariffs and city - country subsidies. Should uniform tariffs be scrapped and electricity made more expensive during peak periods? How tough should new housing codes be in demanding minimal electricity use in new houses?. And should consumers have choices about suppliers. (Lloyd G. 'Still in the dark', CM, 3/2/04).

Inadequate electricity supply is looming risk for some areas of SEQ as demand escalates (Wardill S 'Blackouts warning to southeast', CM, 21/5/03)