LETTER FROM MELBOURNE

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LETTER FROM MELBOURNE 1 AUGUST TO 4 SEPTEMBER competition and higher prices, The Herald Sun said. Nuclear choices Prime Minister John Howard has promise to hold binding plebiscites in any areas where nuclear power stations are proposed. The move is a shift from his earlier statement that the location of any nuclear power plants would be determined by commercial considerations, The Age said. The move is most likely an attempt to neutralise any Labor scare campaign on the issue. Premier John Brumby used the comments to criticise Opposition Leader Ted Baillieu who voted against a similar proposal in April, following the then-federal line. Brumby suggested there was a split between Howard and Baillieu. Australia will sell uranium to India. Finessing the market The Australian Energy Market Commission has abolished the ‘Snowy Region’ of the national electricity market, in a ruling that is designed to remove distortions in the $11b a year market. The national energy market was established in 1998 to link state-based electricity markets. The move should encourage power generators to bid their electricity in a more competitive way, and allow the Snowy Hydro (the country’s largest hydro generator) to increase its output when there is a high demand for energy. AEMC chairman John Tamblyn said the decision would lead to a more competitive market benefiting the consumer. With the ‘Snowy region’ abolished, the Snowy’s Tumut generating plant will be absorbed by the NSW region of the national energy market, while its Murray Plant is part of the Victorian Region, the Financial Review said. Power year Origin Energy produced a 38 per cent rise in net profit to $457m despite high wholesale energy prices. Origin’s power generation earning’s increased by 69 per cent, from $58m to $99m. Managing director Grant King described it as an exciting and challenging year, The Age reported. Basslink’s buyer The Basslink electricity cable that connects Victoria to Tasmania has been bought by Singapore-based CitySpring Infrastructure for almost $1.2b, The Age reported. Low burner The Essential Services Commission has handed down a draft decision which would reduce the cost of distributing gas by 10.1 to 18.7 per cent (depending on the network). However, Premier Brumby warned consumers against expecting a price cut, saying increasing consumption cost, increasing demand for gas-fired electricity and the growing economy mean prices are more likely to rise than fall, The Age said. No blackouts CitiPower has made a proposal to the Essential Services Commission to prevent big power blackouts. The project would cost $50.2m, which would be borne by the energy provider’s 295,000 customers. The Australian Energy Regulator investigation into Dignity & Charm the 16 January interruption to power during the bushfires last year will deliver ‘specific action plans, with market players the key focus’, according to The Age. Not enough wind Energy giant AGL has dumped its controversial $140m wind farm planed for South Gippsland saying other projects were more financially attractive, The Age reported. Nearby, Danish wind-machine manufacturer Vestas has said it will close its blademanufacturing factory, 130 jobs. Not the brightest bunch A third of Victorian households still have not changed to power-saving light bulbs. The State Government will launch a series of advertisements encouraging people to make the switch, The Age reported. Nearly 8 per cent of Australian households pay extra to ensure the energy they receive is from environmentally friendly sources, according to The Age. A report showed nearly a quarter of all Victorian electricity customers switched providers in the past year, making this state the ‘choosiest in the world’, the Financial Review said. Interesting tiff Esso, a subsidiary of Exxonmobil, has revealed that as well as extending by 20 to 30 years its current oil and gas fields in the Bass Strait it will explore the gas potential of geological structures deep beneath the existing fields. This has caused concern for the prospect of hydrocarbon reservoirs in the Bass Strait for the storage of greenhouse gases, The Age said. The $5b Monash Energy ‘coal to liquids’ project in the Latrobe valley had planned to use the sites for carbon storage. The Monash project would turn brown coal into gas for further conversion into 60,000 barrels of synthetic diesel a year. But in order for the project’s greenhouse gas emissions to remain at an ‘acceptable level’, a concentrated stream of carbon dioxide needs to be separated for geo-sequestration (the process known as carbon capture and storage or CCS). Getting smarter Energy Retailers Association of Australia held a forum at PricewaterhouseCoopers, addressing Privatisation: A Decade On and Smart Meters and the Wholesale Market, with speakers including former Victorian Treasurer Alan Stockdale, and Alan Moran, Institute of Public Affairs. The Essential Services Commission is presently holding an inquiry into the development of smart meters, which follows a recent government commitment to have them THE ROYAL SOCIETY OF VICTORIA Promoting and Advancing Science and Technology since 1854 available for Business Lunches and Dinners Board Meetings Lectures Product Launches Seminars Garden & Cocktail Parties Located in The CBD cnr LaTrobe Exhibition & Victoria Streets Bookings 9663 5259 admin@sciencevictoria.org.au ABN 62 145 872 663 installed within five years. The Department of Industry Tourism and Resources put out a request for tender for the development of a ‘geothermal industry development framework and technology roadmap’, by 8 August, www.tenders.gov.au. Waer Some good news The five weeks leading up to the beginning of August saw Melbourne’s water supplies increase by 26 billion litres, more than any other similar period in 15 years. Water levels in the nine reservoirs jumped from 28.4 to 35.8 per cent. However the state’s largest dam, the Thomson Reservoir remains at just 23.1 per cent capacity, The Age reported. Presently 38.6. Melbourne City Council has begun refilling some of the city’s public fountains, including the Exhibition Fountain in Carlton Gardens, using excess rain water sucked from the Royal Park wetlands. The eight fountains that were reopened do not use large amounts of water. Some other fountains will open again soon pending repairs after long disuse, The Age reported. The decision sparked angry responses from some areas, including cricketers who cannot water their pitches. Refreshing the Yarra Recycled water may be pumped into the Yarra to boost its environmental health. Peter Harris, secretary of the Department of Sustainability and Environment, said it could be used to substitute water taken from the river for drinking, The Age said. Water prices/Review Melbourne water users will pay 14.8 per cent more next from 1 July next year, an increase of $70 for the average household. The Brumby government has disregarded higher increases proposed by a couple of the metropolitan retailers. The proposed increase is in line with the government’s prediction that water prices will double over the next five years to pay for the $4.9b plan to increase Melbourne’s water supply, The Age said. The government is also conducting a ‘sweeping review’ of the three metropolitan water retailers to be finished by February, with the commission to set prices from 2009. Melbourne Water faces fines over two poisonous spills into waterways in the last two years, The Age said. The incidents polluted Sugarloaf Creek in the Yarra Ranges, and Cardinia Creek in Melbourne’s south-east. 12
1 AUGUST TO 4 SEPTEMBER LETTER FROM MELBOURNE Pipe blow out The Wimmera-Mallee pipeline is now expected to cost $688m, over a third more than originally planned. The blow out was revealed by Grampians Wimmera Mallee Water in its new five year water plan, raising questions of who will pay for the increase. The previous budget ($501m) was to be shared equally between the water company, State Government and Federal Government, The Age said. Desalination plant An independent Bass Coast Councillor Gareth Barlow has gone against his colleagues, criticising the State Government’s $3.1b desalination plant. Barlow also criticised his colleagues for their ‘wait and see’ approach, The Age reported. Age Senior columnist, Kenneth Davidson, who has consistently opposed the Bracks/Thwaites plans for a desalination plant and piping water over the great divide on the grounds that they are economically and environmentally unsound, urged Premier Brumby to reconsider other, more sound, water options, including piping Tasmania’s water surplus (no need to watch this space) to Melbourne. Other views (1) Tony Cutcliffe, director of the Eureka Project, a strategic consultancy, wrote a fascinating article in The Age (16 August) explaining how the desalination plant will be funded, owned and operated, and suggests that it will probably not be built because foreign owners would be making a politically unacceptable number of cents from each litre of cleaned water. Other views (2) Senior departmental water bureaucrat Garry Seaborne seems to have contradicted government policy, when he said Victoria’s drinking water should include 10 per cent recycled water according to the Leongatha Star. Around the same time former-water minister John Thwaites revealed Melbourne’s water authorities were considering recycled water for drinking last year The Age said. Murray debate moves along The Queensland Nationals (especially Barnaby Joyce) caused fresh problems for the Federal Government by rejecting the draft legislation for Prime Minister John Howard’s $10b plan to rescue the Murray-Darling river system, The Age reported. Victorian Premier Brumby is maintaining a hard line on the issue, saying that the Murray-Darling take-over would not have his government’s support unless Victoria’s amendments were included. Brumby’s scepticism comes partly from his perception of the move as being located within the context of Howard’s ‘rush of interventions’. State Labor members of an inquiry into the controversial water bill have said that the takeover may involve reductions in water entitlements to farmers. The government has repeatedly ruled out compulsory acquisition of water under the plan, The Age said. The Federal Government made a significant concession to Victoria this month, formally ruling out compulsory acquisition of water entitlements. The Prime Minister had threatened to deny Victoria its share of the $3.5b budget for irrigation but subsequently decided to use it as a bargaining chip. It will be quarantined for use by the state should it sign up to the deal, according to The Age. Another bargaining chip is that any State Government which does not surrender its powers will not have a say in who sits on a new council set up to determine sustainable levels of water use, the Financial Review said. The Victorian Government says the project would be bad for Victorian farmers, but the stand has given Prime Minister John Howard an opportunity to criticise the states’ obstructionism and promote his new federalism, the Financial Review said. Victoria was the first state to introduce large scale irrigation and this is detailed in an interesting article in The Age by Edwyna Harris of Monash University’s economics department. The Federal Government increased pressure on Victoria by saying it will not fund water buybacks unless all four basin states agree to give Canberra total control, a move that upset NSW Premier Morris Iemma, the Financial Review said. Clear view Graham Kraehe, chairman of BlueScope Steel, a non-executive director of Brambles, and a member of the Reserve Bank board, outlined his ideas about water management, pricing, and efficiency in a speech to an Australian Industry Group forum at Zinc, in Melbourne. Kraehe argued that government must introduce sensible pricing strategies that take into account how water is being used; that pricing changes can be used to make water-saving projects more economical and more attractive to companies; and finally, that government must encourage decentralised water solutions (such as rain-water harvesting). Bottling up water info According to The Age, Melbourne Water is spending thousands of tax-payer dollars in legal fees to block the release of cabinet briefings on the states water crisis on the grounds that they may cause ‘unnecessary debate’ about the drought and water supplies. The Age requested the documents under freedom-of-information laws, and the case will go before the Victorian Civil and Administrative Tribunal this year. Fruit tree danger Although farmers in Victoria’s Goulburn system were allocated water from 15 August, their counterparts in the Murray district started the irrigation season with just five per cent of their allocations, their least ever and barely enough to keep trees alive, The Age reported. The effect on fruit crops will be devastating and many acres will be bulldozed. Victorian agriculture is more about trees and vines and longer term commitment crops, whereas NSW and Queensland have much more rice, and cotton. Waterfind, a national water broking company says water prices shot up by 180 per cent last year on the temporary trading market as irrigators frantically topped up supplies. In the pipeline New Premier Brumby faces his first significant challenge: pushing through the water infrastructure bill, which is crucial for the north-south pipeline. The legislation would allow the government to overrule local planning laws to speed up major water projects. Amendments were made to the Bill in the Legislative Council through the combined efforts of Liberals, Nationals and Greens, The Age said. Practical competition flushed Services Sydney, a private company, is upset that the NSW government will go ahead with its Kurnell desalination plant (which is expected to provide 16.5 per cent of Sydney’s daily water supply) saying it will ‘flood the market’ and that it is uncompetitive behaviour. The company, which has been trying for some time to break Sydney Water’s monopoly on water and sewerage services, was dealt a double blow: the same day that the NSW government signed a contract to begin work on the desalination plant, the Australian Competition and Consumer Commission accepted Sydney Water’s proposed terms for access to its sewerage transportation infrastructure. Services Sydney has applied to the Australian Competition Tribunal for a review of the decision, the Financial Review reported. Another water conference The Victorian Water Industry Association is holding its annual water conference on 13 and 14 September in the Yarra Valley, www.vicwater.org.au. Standard good quality speakers. There are so many energy and water conferences these days. Gaming Victoria’s gambling problem Victorians have lost $27.3b in 15 years of poker machines, The Herald Sun said, and are now losing $2.5b per year (about $7m a day). Former Premier Jeff Kennett expressed regret this month that regional pokies ‘super clubs’ had never got off the ground. He rejected critics saying the vast majority of poker machine players do so within their financial limits, The Herald Sun reported. Attempts to cut the number of poker machines from the current 27,500 in Victoria were defeated by a voting bloc of the Nationals and Labor, The Age said. First it was St Kilda, now … The Western Bulldogs found themselves (as St Kilda and its relationship with gaming machines and councils) up against a formidable opponent this month in the form of gaming giant Tabcorp. Tabcorp is believed to be angry (and possibly considering legal action) over plans to move 48 poker machines from the club’s headquarters. Maribyrnong Council is expected to require the Bulldogs to remove the pokies in line with its $21.5m plan to redevelop the dilapidated Whitten Oval into a community hub. Victoria University, which has plans for a sports science campus on the site, and would contribute $8m to the project, is unlikely to go ahead with the pokies in place. There are also many federal dollars 13
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