Right now there is pressure to de-rate the Snowy hydro system to divert water down the Snowy River. The most celebrated green victory was in preventing Tasmania building the Franklin Dam, the last major potential hydro operation in the Apple Isle. Less well known, but more serious, was the Queensland Labor Government's thwarting of a major hydro facility, Tully-Millstream, in the early 1990s. In the process, Queensland was transformed from the State with the lowest cost, most reliable electricity industry into the State with the highest electricity costs. In Australia, the dangers for power system security and excessive energy prices stem not from a lack of government action but from a surfeit of it.
Governments can easily destroy incentives to build facilities at the right time and place.
This was made clear by ACCC Commissioner Rod Shogren in a recent address to an energy conference in Melbourne. Mr Shogren pointed out that, 'Governments are likely to make decisions that protect their constituents from negative short-term impacts but which compromise the ability of the market to deliver long term benefits'. A new government transmission line, or a new power station built with government money or on the back of favourable treatment delivers a message to the market. It says that prices will be held back, thereby reducing entrepreneurs' incentives to undertake investment. For Victoria in particular, such government measures would put in doubt power station developments like those being considered by Mission Energy, AGL and AES Transpower.