1 00:00:00,160 --> 00:00:02,520 Speaker 1: Here's a sign where the power market's at electric key, 2 00:00:02,520 --> 00:00:04,560 Speaker 1: we's closing their books to new customers right and near 3 00:00:04,600 --> 00:00:07,120 Speaker 1: the electricity Well, they blame the electricity authority in the 4 00:00:07,120 --> 00:00:10,959 Speaker 1: Comments Commission for allowing what they call market failure. The 5 00:00:11,000 --> 00:00:13,640 Speaker 1: wholesale price is to blame. The chief executive, Luke Blinko 6 00:00:13,800 --> 00:00:15,680 Speaker 1: is with us on this. Look very good morning to you. 7 00:00:16,560 --> 00:00:17,239 Speaker 2: Good morning, Mike. 8 00:00:17,400 --> 00:00:19,920 Speaker 1: We have been here before. Will we be here again? 9 00:00:21,120 --> 00:00:23,880 Speaker 2: Well, you'd like to think not, but it would appear, 10 00:00:24,079 --> 00:00:29,200 Speaker 2: based on the regulatory failure that has continued probably for 11 00:00:29,240 --> 00:00:33,159 Speaker 2: the last ten years at least, hard to see it 12 00:00:33,360 --> 00:00:36,440 Speaker 2: getting better without some real urgency around intervention. 13 00:00:36,760 --> 00:00:38,800 Speaker 1: If I ring the Comments Commission right now and said 14 00:00:38,840 --> 00:00:40,680 Speaker 1: do you reckon there's market failure and power, would they 15 00:00:40,680 --> 00:00:41,400 Speaker 1: agree with you or not? 16 00:00:43,120 --> 00:00:45,440 Speaker 2: I think they'd give you a fairly measured answer, Mike, 17 00:00:46,200 --> 00:00:48,160 Speaker 2: But I think they would have to admit that there's 18 00:00:48,320 --> 00:00:51,120 Speaker 2: there's strong indications of issues in the market. 19 00:00:51,159 --> 00:00:53,040 Speaker 1: For sure what you need to be as a gen Taylor, 20 00:00:53,080 --> 00:00:53,479 Speaker 1: don't you. 21 00:00:54,920 --> 00:00:58,200 Speaker 2: Well? Right now that seems to be the case, but 22 00:00:58,240 --> 00:01:00,960 Speaker 2: that's not how it should be. You rightly point out 23 00:01:00,960 --> 00:01:05,000 Speaker 2: that we rely on markets to deliver you know, efficient 24 00:01:05,040 --> 00:01:09,240 Speaker 2: outcomes for what is actually essential service. But when you've 25 00:01:09,240 --> 00:01:11,840 Speaker 2: got distortions in that market, you get in efficient outcomes. 26 00:01:11,840 --> 00:01:14,360 Speaker 2: And that's what we're seeing now with a forty eight 27 00:01:14,400 --> 00:01:17,880 Speaker 2: percent increase in wholesale energy prices in the last six months. Now, 28 00:01:18,240 --> 00:01:22,440 Speaker 2: we've heard inflaced good news on inflation yesterday, but things 29 00:01:22,440 --> 00:01:23,160 Speaker 2: like this won't help. 30 00:01:23,560 --> 00:01:26,200 Speaker 1: But on the wholesale and correct me if I'm wrong. 31 00:01:26,240 --> 00:01:28,400 Speaker 1: The reason that the wholesale price goes up is because 32 00:01:28,400 --> 00:01:30,880 Speaker 1: we don't have enough rain, or we don't have enough dams, 33 00:01:30,920 --> 00:01:33,240 Speaker 1: or we don't have enough windmills, or we haven't burned 34 00:01:33,319 --> 00:01:35,280 Speaker 1: enough coal. I mean, that's what boils down to, isn't it. 35 00:01:35,959 --> 00:01:38,600 Speaker 2: Yeah, which relates to the build of capacity. A right, 36 00:01:38,640 --> 00:01:43,080 Speaker 2: So of our capacity today, eighty five percent of it 37 00:01:43,160 --> 00:01:46,440 Speaker 2: was built before privatization. So the current incumbents and here 38 00:01:46,480 --> 00:01:50,040 Speaker 2: at eighty five percent of that capacity, the incentive to 39 00:01:50,080 --> 00:01:54,240 Speaker 2: build more is fairly muted by the strong incentive to 40 00:01:54,320 --> 00:01:57,560 Speaker 2: keep supply tight and the existence of market power to 41 00:01:57,640 --> 00:02:00,240 Speaker 2: allow them to do that. So you know, I don't 42 00:02:00,280 --> 00:02:04,040 Speaker 2: think it's any coincidence that once the Tea Wadal was announced, 43 00:02:04,400 --> 00:02:09,320 Speaker 2: a whole lot of preconsented developments suddenly came out of 44 00:02:09,360 --> 00:02:12,000 Speaker 2: the got dusted off, and came off the shelf. So 45 00:02:12,680 --> 00:02:17,240 Speaker 2: there's a real incentive for the generators and the ability 46 00:02:17,320 --> 00:02:20,240 Speaker 2: to use market power to keep supply tight. And that's 47 00:02:20,560 --> 00:02:21,840 Speaker 2: really the another of this issue. 48 00:02:21,880 --> 00:02:24,799 Speaker 1: But Onslow was also curtailing matters, wasn't it. At the 49 00:02:24,880 --> 00:02:26,239 Speaker 1: end of the day, the government was going to be 50 00:02:26,280 --> 00:02:28,799 Speaker 1: sinking sixteen billion dollars into something. Why would you invest 51 00:02:28,800 --> 00:02:30,080 Speaker 1: in anything now that that's gone? 52 00:02:30,080 --> 00:02:34,000 Speaker 2: They can well. I think Teaway's probably had a bigger impact. 53 00:02:34,040 --> 00:02:38,960 Speaker 2: I don't think you know, Onslow was necessarily even that 54 00:02:39,000 --> 00:02:42,000 Speaker 2: far advanced for people to be nervous, And we haven't 55 00:02:42,000 --> 00:02:45,280 Speaker 2: seen any new players really emerge at any scale since 56 00:02:45,320 --> 00:02:49,640 Speaker 2: the closure of Onslow, and in the meantime we haven't 57 00:02:49,680 --> 00:02:54,440 Speaker 2: really built anything else. So it comes back to incentives. Might. 58 00:02:54,800 --> 00:02:57,000 Speaker 1: As much as you want to run a good business 59 00:02:57,040 --> 00:02:58,840 Speaker 1: and be successful and God bless you in doing that, 60 00:02:58,919 --> 00:03:01,639 Speaker 1: aren't there enough in the market, be they gen Taylors 61 00:03:01,720 --> 00:03:03,560 Speaker 1: or not. Aren't there enough people in the market without 62 00:03:03,600 --> 00:03:06,080 Speaker 1: you for us to be broadly as consumers happy enough. 63 00:03:06,240 --> 00:03:07,959 Speaker 1: I mean, yes, it's expensive, and yes we'd like to 64 00:03:08,000 --> 00:03:10,640 Speaker 1: pay less and all that stuff, but it's not like 65 00:03:10,680 --> 00:03:13,040 Speaker 1: the market short of actual people who can supply mepower. 66 00:03:14,000 --> 00:03:16,280 Speaker 2: Well, what it comes down to, MIC is the long 67 00:03:16,360 --> 00:03:18,560 Speaker 2: term is the short term trade off. The role of 68 00:03:18,560 --> 00:03:21,440 Speaker 2: independence really is to keep good down with pressure on 69 00:03:23,000 --> 00:03:26,560 Speaker 2: consumer prices through competition. If you don't want competition, then 70 00:03:26,600 --> 00:03:28,560 Speaker 2: you don't really have a market, do you. So we 71 00:03:28,600 --> 00:03:31,639 Speaker 2: do rely on a market. So you actually do need 72 00:03:31,680 --> 00:03:35,960 Speaker 2: players like us who are actually more efficient at retailing 73 00:03:36,000 --> 00:03:40,600 Speaker 2: than the incumbents who cross subsidize their retail businesses which 74 00:03:40,640 --> 00:03:43,680 Speaker 2: are hopelessly inefficient. So in the long run, all you'll 75 00:03:43,760 --> 00:03:47,040 Speaker 2: end up with as massively higher prices once you lose 76 00:03:47,120 --> 00:03:49,840 Speaker 2: that that level of competition. 77 00:03:50,600 --> 00:03:54,560 Speaker 1: I admire your pluck and I wish you well. Luke Blinko, 78 00:03:54,600 --> 00:03:56,920 Speaker 1: who's the Electric key we ceo with us this morning. 79 00:03:57,360 --> 00:04:00,280 Speaker 2: For more from the Mike Asking Breakfast, listen Love to 80 00:04:00,400 --> 00:04:03,440 Speaker 2: News Talks at B from six am weekdays, or follow 81 00:04:03,480 --> 00:04:05,080 Speaker 2: the podcast on iHeartRadio.