4 September 2024

ALAN HAYES

 

IT doesn’t matter which way you twist it, bend it, justify it, or try sell it, expecting homeowners, who are exporting solar power into the grid, to pay a tax for the privilege to do so, instead of being paid for a commodity that will be sold on, is immoral. This unscrupulous impost upon home owners must now guarantee Ausgrid as the frontrunner for the ‘Autocratic Bastardry Award’ – vying for second place position is the Australian Energy Market Operator (AEMO).

 

The Grapevine has previously published three stories on the unconscionable behaviour of the electricity and gas industry – once again restating a corporate attitude that has no consideration for other people’s wishes or opinions, but based upon a desire to only maximise profit at the expenses of others.

 

But who are the players in this autocracy? Ausgrid control the electricity supply on the Central Coast, Sydney and the Hunter Valley, which 49.6% owned by the ‘people’s friend’ the NSW Government, 8.4% owned by AustralianSuper, 25.2% owned by IFM Investors and 16.8% owned by APG Asset Management Group. The next player in this attempt at totalitarianism is, another so-called friend of the people, the AEMO, which is owned 60% by the Government and 40% by industry and market participants. It is little wonder that the odds of a fair deal on energy supply being passed on to struggling households is as rare as winning the PowerBall on a Thursday night.

 

So, who else lines up in the autocratic players list? The gas industry has five ‘star players’ who each hold equal first place to receive the ‘Gold Autocratic Bastardry Award’ – Woodside, Chevron, Shell Impex and Santos; all multinational corporations who have perpetrated the biggest ‘government legalised’ scam in Australian history, which is going on right now.

 

Australian governments charge no royalties on 56% of the gas that is exported from Australia. Over the last four years, multinational companies made $149 billion exporting gas they got for free. To add to the obscene profits, of the five runners-up to receive the ‘Gold Autocratic Bastardry Award’, they have paid no tax and no royalties whatsoever. It’s been a windfall for them and a costly impost for Aussies who use gas to cook with and to heat their homes.

 

If royalties had been charged on this gas, at least $13.3 billion in revenue could have been raised.

 

Why Is Ausgrid charging you for solar?

 

Like all profit-based organisations, and Ausgrid is no exception, the rhetoric flows like verbal diarrhoea, when it comes to justifying their actions.

 

Ausgrid expects a significant increase in the number and size of solar systems connected to its network in the future.

 

According to Ausgrid, as more people invest in solar energy, the demand on the network will change. It’s no longer just about “delivering energy to homes and businesses; it’s also about handling the energy exported back to the grid.” But who is really being handled?

 

Ausgrid contend that this shift means the network needs upgrades to support the extra load and ensure a reliable supply for everyone. “While the cost increase over the next five years is expected to be small, it could grow in the future.”

 

“To manage these costs and encourage better solar energy use, a two-way tariff is being introduced.

 

“This new tariff encourages customers to use their solar power first and export any excess energy later in the day. It will help keep energy bills lower for everyone and ensures that customers without solar systems or batteries do not bear most of the costs.”

 

There no doubt that the Ausgrid ‘spin doctors’ want to convince customers that they’re on the side of the angels. Ausgrid believes it’s likely the two-way tariff will have a “very small impact” for most solar owners. In an example given by them, a system sent 307 kWh into the network between 10am and 3pm for the month of November, when there is a “free threshold” of 205 kWh. The customer is charged for 102 kWh, which Ausgrid says is $1.19 for the month. On the reward side, the customer has sent 52 kWh into the network after 4pm, earning $1.21; the overall result is a credit of 2 cents - spend it all at once an penury will be knocking at the front door.

 

“It’s a very tiny signal we’re sending,” an Ausgrid spokesperson said.

 

But like all things in life there are no guarantees – Ausgrid recently let it slip that the ‘sun tax’ would increase periodically.

 

Digging deeper into the ‘Ausgrid spin’, it is claimed that the grid cannot handle the amount of power now being exported to it. Yet Ausgrid have failed to explain how a sun tax will solve this problem if solar PV owners cannot direct the excess power during the day into their homes and not export it. Ausgrid’s own data shows that the vast majority of their network can accommodate more rooftop solar, but they want to start slugging people now because by the end of the decade there might be grid issues that arise.

 

Ausgrid’s new two-way tariff is designed to do no more than punish solar panel owners who produce excess power into the grid. Power that is sold on average at a retail rate of 44-cents/kWh during the shoulder period from 10am to 3pm - even higher during the peak evening period.

 

Let’s not forget, the AEMO, who's vying for runner up position for the ‘Autocratic Bastardry Award’, is in favour of a ‘sun tax’ and consented to it being introduced.

 

The bitter irony of the electricity network

 

There is little doubt that Ausgrid do not want to invest large amounts of money in upgrading the electricity grid system. Instead, their business model is to encourage business and homeowners to install more rooftop solar as a way of saving money on network investment and to offset some of the billions of dollars it spends on replacing aging network infrastructure, whilst at the same collecting a ‘sun tax’ and not being responsible for infrastructure costs.

 

Rooftop solar – along with battery storage – is the core of the development of renewables based micro-grids, which, according to Ausgrid, offer a more secure, reliable and affordable mini-grid. An exciting prospect for the Ausgrid bean-counters as a way of replacing the aging network infrastructure, reducing eighty per cent of their operating expenditure over the next decade, while they unfairly squeeze money from home solar installations.

 

The other side of the coin

 

When it comes to the gas industry, it’s ‘heads’ on both sides of the coin - prime time television advertising, which extols the benefits of gas being good for Australians and good for the economy, is covering up dark secret that is adding further to the cost of families struggling to pay the bills and put food on the table.

 

According to the Australian Government’s Future Gas Strategy, gas is “critical” to the nation’s economy. In view of this, many Australians might be surprised to learn that a large amount of the country’s gas reserves are essentially being given away for free.

 

In May 2024, the Australian Government released its Future Gas Strategy, which committed to gas production and export “through to 2050 and beyond”. The report begins with an assertion from Minister for Resources, Madeleine King, that: “Gas plays a critical role in Australia’s economy”. However, the 67-page 'main report' and accompanying 110-page ‘analytical report’ make no mention of royalties, tax, or revenue. The absence of these terms from a government policy document is surprising – until you realise how little the gas industry actually pays in tax or royalties, particularly on gas that is exported.

 

Before it can be exported by sea, however, fossil methane gas must be converted into a liquid known as liquified natural gas (LNG).

 

Along with the USA and Qatar, Australia is one of the world’s largest LNG exporters. Australia’s combined processing and export capacity is over 87 million tonnes of LNG per year, spread over ten LNG processing and export facilities (LNG facilities, with no royalties being paid on the majority of this gas) - the gas is essentially being given away for free.

 

Yet petroleum resources in Australia, which includes natural gas, is a resource owned by all Australians – a resource that the community expects to receive a return from for the mining of the resource. But the ‘people’s federal friend’, the Albanese Government, seems to have little interest in collecting royal payments or taxes.

 

And what about the taxes? The Australian Taxation Office (ATO) has labelled the oil and gas industry as a “systemic non-payers” of tax. In 2020-21, individual corporations Woodside, Exxon, Shell, Chevron, Inpex and APLNG paid no income tax or PRRT on $34 billion of income. Record prices in 2021-22 saw these companies’ income leap to $56.3 billion, while paying just $454 million in company tax payments. Senate estimates hearings have revealed that the accumulation of tax credits under current rules could mean that much of the LNG industry could avoid paying PRRT indefinitely.

 

According to David Slama, Northern Territory-South Australian Director of the Australian Energy Producers (AEP), the gas industry is paying their fair share in royalties and taxes.

 

If you haven’t heard of the AEP, it is essentially a lobby group, who,  according to their website, are “the effective voice of Australia's upstream oil and gas industry on the issues that matter” – in other words, corporate ‘spin doctors’.

 

With over half of Australia’s gas exports being given to gas companies for free, and low royalty rates levied on the gas for which royalties are paid, Australia is receiving a very small amount of revenue from the LNG industry. This stands in contrast to the record profits currently being made by the LNG export industry.

 

In 2022–23, at a time of record high LNG prices due to the Russian invasion of Ukraine, the LNG export industry paid a total of $2.8 billion in royalties to national and state governments in Australia. This represented just 3.8% of the $71 billion value of the LNG it exported during that period.

 

For an international comparison, Qatar exports almost the same amount of LNG as Australia along with a slightly larger oil industry. On an energy basis, Qatar produces 50% more oil and gas than Australia. However, the revenue received by Qatar from its oil and gas industry is six times greater.

 

But the gas industry debacle is not getting any better, it’s getting worse! At least six large new gas projects are currently under development to supply LNG export facilities in Australia. The vast majority of gas produced from the new fields under development will be royalty-free.

 

If these proposals go ahead, they will result in the overall proportion of Australia’s gas resources given away royalty-free increasing significantly from current levels.

 

While other countries charge royalties for gas and other resources extracted in their territorial boundaries, the Australian government is giving away tens of billions of dollars’ worth of gas to multinational gas exporters every year. This gas is a non-renewable resource managed by state and commonwealth governments on behalf of all Australians. Giving it away to gas companies making multi-billion-dollar profits denies Australians a fair return and promotes over-exploitation of the resource.

 

The billions of dollars in forgone revenue each year from effectively giving away Australian gas could be invested in a sovereign wealth fund (as it is in Norway) or used to raise productivity and increase living standards of Australians by funding schools, hospitals, renewable energy, and other needed public infrastructure.

 

Mismanagement of our electricity and gas resources

 

For a nation that believes it is the clever country, we have, with the mismanagement of our governments, allowed ourselves to become ensnared into the ‘spiralling-out-of-control’ greed of the energy industry and become the victims of ‘private enterprise autocracy’.

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