POWER FOR PEOPLE & PLANET, BEFORE PROFIT

WHY A VICTORIAN PUBLICLY-OWNED ENERGY RETAILER WOULD HELP THE TRANSITION TO 100% CLEAN, FAIR & AFFORDABLE ENERGY.

Victoria's energy system fails the community and the climate.  It allows for massive profits for polluting coal companies, while households face a confusing array of bad deals and overpriced energy. The true cost of coal is obscured by the energy market, indirect Government subsidies and a confusing retail system that fuels climate change and serves consumers poorly.

By creating a not-for-profit, publicly owned, renewable-energy-focused energy retailer, Victoria has an opportunity to deliver real solutions to the state - creating more investment in renewables and forcing coal companies to reduce their profits to remain competitive in the market.


 

Recent reports (1, 2, 3) reprimand Victorian energy retailers for overcharging consumers for the retail components of their energy bills. These reports also accuse energy retailers of failing to pass on wholesale cost reductions to their customers. Currently, the profit margins and overhead costs of retailers constitute around 30-40% of an average Victorian power bill with Origin and AGL making $7.2 billion in profits last year.

In addition to this, current national policy stagnation has created an environment in which investment in renewables is no longer incentivised and private retailers will continue to price gouge for profits.

Victoria needs to take decisive, radical action to ensure Victorians have an energy sector that is fair, environmentally sustainable and transparent.  

By creating a not-for-profit, publicly owned, renewable-energy-focused energy retailer, Victoria has an opportunity to deliver real solutions to the state - creating more investment in renewables and forcing coal companies to reduce their profits to remain competitive in the market.

 

 

 

 

 

 

 

 

 

THE CASE FOR A VIC PUBLIC-ENERGY RETAILER.

  • PRIVATIZATION HAS FAILED.

Since the privatization of the Victoria’s energy retail sector in the 1990s, prices have risen over 200%. These increases disproportionately affect vulnerable low-income households, which spend up to five times more of their disposable income on energy bills than those in higher-income households. We need an affordable energy system that is just and provides social equity and environmental sustainability, not one primarily concerned with making profits for shareholders and paying large bonuses to CEO’s.

  • THE MARKET IS DELIBERATELY CONFUSING.

The idea that competition would provide consumers with more affordable options has not come to fruition. Consumers find it confusing to compare offers and retailers aren’t transparent about the best deals available. The idea that the market should moderate the cost of energy and decide which energy technologies will be used going forward is not working and will not deliver the results the community needs. Premiums charged for Green Energy are unaffordable for many, at a time when concern for climate change and approval of renewable energy is high.

  • COAL IS FUELING CLIMATE CHANGE.

80% of Victoria’s energy comes from three ageing coal plants with licenses up until 2048. Burning coal has been repeatedly linked to exacerbating climate change with reports finding coal to be the single biggest contributor to anthropogenic climate change.  Unchecked climate change exposes Victorian communities to intensifying heatwaves, bushfires, droughts, and extreme weather. These impacts threaten public health, infrastructure, agricultural production, and the ability for Victorians to have a safe and prosperous life. The announcement in August 2018 that 100% of New South Wales was drought declared, is a disconcerting reminder of the already apparent impacts of climate change.

Coal is having huge and immediate health impacts for local communities around the Latrobe Valley. Our 3 coal fired power stations in the Valley are some of the oldest, dirtiest and most polluting in Australia. These communities are calling out for assistance and it is only fair that they are listened to and supported in transitioning their economy and livelihoods away from coal.

  • COAL IS UNRELIABLE.

Since December 2017 there have been 120 gas and coal breakdowns across Australia, with ageing stations especially vulnerable to extended and intensifying heatwaves. According to research by the Australia Institute , a single coal station failure in Victoria last Summer cost the Victorian Energy System $163 million - which is ultimately passed onto consumers in a state facing some of the highest rates of energy poverty in the country.


 

WE NEED A SYSTEM THAT PUTS PEOPLE AND PLANET BEFORE PROFIT.

Energy is an essential service and public services involve caring for people.  Private companies cannot be trusted to deliver clean and affordable energy without passing on costs to consumers, cutting corners or neglecting power station maintenance. 

Communities around the world are bringing energy back into public ownership for lower bills, more renewable energy, and to combat corporate power.  In the UK alone publicly owned alternatives are springing up everywhere, like Bristol EnergyRobin Hood EnergyThe People's Energy CompanyWhite Rose Energy and Our Power.  In Australia we've seen our first community owned retailer, Enova, Cooperative Power is building collectively-owned power and the Queensland Government has announced CleanCoa new publicly owned clean energy generator.

These alternative options have proven successful in privatised energy retail markets, for bringing back a focus on affordability, empowerment, justice and equity. By looking at case studies of not-for-profit energy retailers in this context, such retailers not only offer an affordable, socially and environmentally conscious alternative for consumers, but can ensure that any benefits are shared with the communities impacted by them.

MORE INFO: HOW THE RETAILER COULD WORK.

There are many advantages to an essential service being publicly owned (REF) - the two major advantages we see as:

  • REDUCING COSTS / INCREASING FAIRNESS

This retailer would be not-for-profit, delivering renewable energy at as close to cost price as possible. It would have lower overheads than commercial retailers with less large marketing costs and without a large mark-up on our energy, households could save up to $600 a year on their power bills (more here). Instead of profits going to shareholders, surplus would be reinvested in community to benefit people and could focus on energy efficiency, solar, and other energy services to lower power bills even more.

  • HELP BRING COAL CLOSURES FORWARD

Other countries that have introduced a socially driven, public energy approach have seen a reduction in charges from other private retailers as they strive to compete in the market.  In our current system, hardship programs and disconnections cost energy companies money. The public retailer would reduce this cost burden to private retailers, which could encourage private companies to lower bills for everyone else.  

If the 'Big 3' energy companies (and coal station owners) reduced their prices to compete with the non-profit retailer, the profitability of coal would decrease.  This would increase investment in renewable energy, cut emissions and push down power prices.  Combined with a number of other mechanisms currently being campaigned for by FoE Melbourne campaigns like Y2R and AOC - a public retailer would be an important starting point for progressing our energy sector into the 21st century.

 


 

For more information contact:


Zianna Fuad zianna.fuad@foe.org.au

Chris Taylor chris_james_taylor@yahoo.com

Dom O'Dwyer dmncdwyr@gmail.com