Australian Politics Forum - NSW Taxpayers face huge bill after power sale

Frances

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NSW Taxpayers face huge bill after power sale
Mar 9^th, 2012 at 9:12am

Quote:

NSW taxpayers could be left paying tens of millions of dollars a year in penalties incurred by the state's electricity generators after they are sold under the O'Farrell government's privatisation plans.

Legislation to facilitate the sale gives the Treasurer, Mike Baird, the power to transfer the financial liabilities attached to the power generators to other state-owned entities before they are sold.

These may include tens of millions of dollars in "availability liquidated damages" each year if a generator fails to supply the amount of electricity it is contracted to produce.

"Looking for a quick hit of cash to fatten its election war chest, while leaving households to carry the downside risk for decades to come"... John Kaye's take on the O'Farrell government. Photo: Wayne Venables
The NSW Auditor-General revealed last year that one generator company, Delta Electricity, expected to be liable for $46.3 million in damages payments over the next four years. Another, Eraring Energy, had budgeted to pay $6.7 million in penalties for 2011-12.

The liabilities are a consequence of Labor's partial sale of electricity assets before last year's election, under which the trading rights to electricity output from a number of power stations were sold, but the power stations were retained in public hands.

An expert report commissioned as part of the Tamberlin inquiry into the electricity industry said any future sale of the power stations would be "significantly compromised" by the terms of the contracts between the power stations and the companies that bought the trading rights.

If Mr Baird decides to shift the liabilities from the power stations to another state-owned entity then the financial burden of the penalties would remain with taxpayers even after they are sold.

A spokeswoman for Mr Baird said the legislation "empowers the government to do what's in the best interests of NSW taxpayers" and was guided by the recommendations made by former judge Brian Tamberlin.

"The detail of the sale of the state's generators has been subject to expert advice, as was recommended by Justice Tamberlin," she said.

"The government is implementing Justice Tamberlin's findings that the state should not be in electricity generation. Throughout this process the government will act in the best interests of NSW taxpayers."

The government is likely to consider removing the financial liabilities as a means to secure a better sale price for the power stations, which may be done by tender or a public float.

But the NSW Greens MP John Kaye said the government was "looking for a quick hit of cash to fatten its election war chest, while leaving households to carry the downside risk for decades to come".

"Privatising the profits while forcing taxpayers and consumers to bear all the risk might work for the Coalition's 2015 election plans but it will leave the state and households much worse off," he said.

The Premier, Barry O'Farrell, has ruled out selling the network businesses, or "poles and wires", despite the urgings of business groups and the chairman of Infrastructure NSW, Nick Greiner.

http://www.theage.com.au/environment/taxpayers-face-huge-bill-after-power-sale-2...

I suppose if it helps balance the budget in the short term, it must be OK......

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Kat Gold Member Offline Socialism IS the answer. Posts: 17709 Everywhere and no-where Gender:	Re: NSW Taxpayers face huge bill after power sale Reply #1 - Mar 9^th, 2012 at 10:46am Quote:- "Throughout this process the government will act in the best interests of NSW taxpayers." Oh, really? You haven't so far, why start now?
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Dnarever

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Re: NSW Taxpayers face huge bill after power sale
Reply #2 - Mar 9^th, 2012 at 11:33am

Quote:

"The government is implementing Justice Tamberlin's findings that the state should not be in electricity generation.

How does a judge come to that position in a finding?

Provision of essential services has always been in the public domain and is obviously troublesome when in private hands.

The issue of suggesting privatisation as a basis of belief is more a matter of dogma than a legitimate argument from a rational enquiry outcome.

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Verge Gold Member Offline Australian Politics Posts: 6329 Gender:	Re: NSW Taxpayers face huge bill after power sale Reply #3 - Mar 9^th, 2012 at 12:54pm Considering how many other privatisations have been a disaster, why are they being so arrogant as to sell an asset that will make them money in the years to come. It's short sighted and pathetic
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Doctor Jolly

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Re: NSW Taxpayers face huge bill after power sale
Reply #4 - Mar 9^th, 2012 at 1:26pm

The latest NSW disaster in waiting is that OFarrell is thinking of selling off city train stations to private companies.

What an absolute disaster. All stations would effectively be little monopolies like the airport station, and we'd be charged $20 a ticket (like the airport station).

FFS, A governments role is to fund and provide infrastructure.

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Karnal

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Re: NSW Taxpayers face huge bill after power sale
Reply #5 - Mar 9^th, 2012 at 1:50pm

Dnarever wrote on Mar 9^th, 2012 at 11:33am:

Quote:

"The government is implementing Justice Tamberlin's findings that the state should not be in electricity generation.

How does a judge come to that position in a finding?

Provision of essential services has always been in the public domain and is obviously troublesome when in private hands.

The issue of suggesting privatisation as a basis of belief is more a matter of dogma than a legitimate argument from a rational enquiry outcome.

It was probably a committee report.

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philperth2010

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Re: NSW Taxpayers face huge bill after power sale
Reply #6 - Mar 9^th, 2012 at 5:49pm

NSW taxpayers have already payed for the infrastructure.....Private companies will make a case to recoup their outlay in purchasing the infrastructure making consumers and taxpayers pay for it a second time.....It helps the Government gain short term revenue but consumers and taxpayers are left paying for it.....Government utilities that make a profit should never be sold off as they belong to the people not the Government!!!

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hawil

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Re: NSW Taxpayers face huge bill after power sale
Reply #7 - Mar 9^th, 2012 at 7:00pm

Dnarever wrote on Mar 9^th, 2012 at 11:33am:

Quote:

"The government is implementing Justice Tamberlin's findings that the state should not be in electricity generation.

How does a judge come to that position in a finding?

Provision of essential services has always been in the public domain and is obviously troublesome when in private hands.

The issue of suggesting privatisation as a basis of belief is more a matter of dogma than a legitimate argument from a rational enquiry outcome.

The judge is probably on $300,000.00+ a year, so he needs a place to invest his excess cash, and that is not possible with government owned assets.
I hope I don't sound too cynical!

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salad in

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Re: NSW Taxpayers face huge bill after power sale
Reply #8 - Mar 9^th, 2012 at 8:38pm

Frances wrote on Mar 9^th, 2012 at 9:12am:

Quote:

NSW taxpayers could be left paying tens of millions of dollars a year in penalties incurred by the state's electricity generators after they are sold under the O'Farrell government's privatisation plans.

Legislation to facilitate the sale gives the Treasurer, Mike Baird, the power to transfer the financial liabilities attached to the power generators to other state-owned entities before they are sold.

These may include tens of millions of dollars in "availability liquidated damages" each year if a generator fails to supply the amount of electricity it is contracted to produce.

"Looking for a quick hit of cash to fatten its election war chest, while leaving households to carry the downside risk for decades to come"... John Kaye's take on the O'Farrell government. Photo: Wayne Venables
The NSW Auditor-General revealed last year that one generator company, Delta Electricity, expected to be liable for $46.3 million in damages payments over the next four years. Another, Eraring Energy, had budgeted to pay $6.7 million in penalties for 2011-12.

The liabilities are a consequence of Labor's partial sale of electricity assets before last year's election, under which the trading rights to electricity output from a number of power stations were sold, but the power stations were retained in public hands.

An expert report commissioned as part of the Tamberlin inquiry into the electricity industry said any future sale of the power stations would be "significantly compromised" by the terms of the contracts between the power stations and the companies that bought the trading rights.

If Mr Baird decides to shift the liabilities from the power stations to another state-owned entity then the financial burden of the penalties would remain with taxpayers even after they are sold.

A spokeswoman for Mr Baird said the legislation "empowers the government to do what's in the best interests of NSW taxpayers" and was guided by the recommendations made by former judge Brian Tamberlin.

"The detail of the sale of the state's generators has been subject to expert advice, as was recommended by Justice Tamberlin," she said.

"The government is implementing Justice Tamberlin's findings that the state should not be in electricity generation. Throughout this process the government will act in the best interests of NSW taxpayers."

The government is likely to consider removing the financial liabilities as a means to secure a better sale price for the power stations, which may be done by tender or a public float.

But the NSW Greens MP John Kaye said the government was "looking for a quick hit of cash to fatten its election war chest, while leaving households to carry the downside risk for decades to come".

"Privatising the profits while forcing taxpayers and consumers to bear all the risk might work for the Coalition's 2015 election plans but it will leave the state and households much worse off," he said.

The Premier, Barry O'Farrell, has ruled out selling the network businesses, or "poles and wires", despite the urgings of business groups and the chairman of Infrastructure NSW, Nick Greiner.

http://www.theage.com.au/environment/taxpayers-face-huge-bill-after-power-sale-2...

I suppose if it helps balance the budget in the short term, it must be OK......

The day will come when these bludgers have nothing left to sell. I'd like to see state parliament turned into a brothel. G*d knows there are enough whores in that building already.

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