For various reasons (concern about climate change, increased consumer awareness, technology change in energy, rise of social media, and the rise of energy policy as a political football, etc…) we’ve witnessed a huge increase in commentary about energy (and energy data) that is coming from all sorts of different corners of the sector. Ourselves, we have also added to this with the commentary we’ve been posting on WattClarity since 2008, or even before.
It’s probably fair to say that none of the commentary can be 100% correct about everything it covers. Of course we’re amongst those who make errors (I do hope we have been reducing the errors we make, over time, and dealing with them when we do).
However reading today Saturday’s piece in the SMH by Allen Hicks of the ETU was one of the more concerning pieces I have read in recent times, especially given its publication in a broadly read media outlet like the SMH. I would have thought there would have been some basic fact checking before publication – particularly the following (very erroneous) claim:
“Since the introduction of the National Electricity Market in 1996 the wholesale price of energy has risen dramatically.” (according to Allan Hicks at the ETU)
Now, leaving aside the fact that the NEM started in 1998 and not 1996 (though there were precursors to the NEM running just in Victoria from 1994, and NSW and QLD after that), this claim seems to somehow link the increase in the wholesale price of energy with the creation of the NEM. I’m calling bullshit on that claim (apologies for the colourful language).
Using our NEM-Review software, I’ve generated the following trend of monthly time-weighted average prices over the entire history of the NEM:
For those who need some assistance, I have added two lines on the chart:
1) The first line (which runs for 16 years since the start of the NEM) is flat. Most monthly averages over that entire range were around $30/MWh (which, as an aside, might be long-run marginal cost only for a heavily depreciated legacy asset).
(a) There are the two big deviations highlighted for the carbon tax period, and the prior NEM-wide drought.
(b) There are also obviously regional deviations due to local supply/demand conditions, and so on.
(c) To be explicit, this flat line shows that wholesale prices did not even keep pace with inflation.
2) Then, we see the rapid escalation of prices from about the start of 2015 which clearly have nothing to do with the start of the NEM.
Let me be clear – prices have risen significantly in the past couple years – there is a train wreck in process, and it is really hurting energy users (particularly large ones), and it is happening for more than one reason (with each of these Villains contributing).
However to try to conflate “prices have risen dramatically” with a belief that this happened because of “the introduction of the National Electricity Market” at best reflects a very, very untrue alternate reality. I would have thought that the Electrical Trades Union would have had a better understanding of the history of our energy sector than that, and it does make me wonder why (it seems) they do not…