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Electricity privatisation: Keneally piloting death star that is Labor

Candace Sutton, a former NSW government media adviser, writes:

BERNIE RIORDAN, COAL FIRED POWER, KRISTINA KENEALLY, MORRIS IEMMA

There's nothing so dangerous or insane as a government on the way out.

Riding the death star that is state Labor, Premier Kristina Keneally and her dwindling corps of lieutenants on the overbridge seem unable to see through the cracks widening on the surface to what lies at its core.

There, past Labor's legions of policy advisers and squadron of media flaks, beyond the labyrinthine workings of its departments and constellation of authorities and administrative agencies, deep within the death star is the dying heart of its giant reactor.

It is the state's electricity industry - the very issue that terminated the career of Keneally's predecessor once-removed, Morris Iemma - and it will prove the Premier's final undoing.

The decision at the weekend by NSW Australian Labor Party president Bernie Riordan, also state secretary of the Electrical Trades Union, to remove automatic endorsement from Labor candidates who support privatisation is a body blow of incalculable proportions to Keneally.

It is an official marker that NSW Labor is tearing itself apart and that the party has dumped the NSW Right.

The winner will be former Unions NSW boss and current Transport Minister John Robertson, who fought a bitter battle against Iemma's electricity privatisation plans and who is now openly touted as Keneally's successor.

Riordan's decision is also borne of the madness of Keneally's latest electricity plan, which is run through with the influence of the dying Labor Right.

Under constant attack by the media about electricity prices, and in particular stung by the criticism of her mishandling of the solar panels subsidy deal, Keneally was in a desperate bid to create a positive headline.

The generous deal for NSW consumers buying into solar power had left the majority of coal-fuelled electricity users (and the majority of voters) with fast escalating bills.

In early November, Keneally made an astonishing decision, to move away from her party's policies to reduce greenhouse gas emissions, and to go back into coal power and privatisation of the industry.

In this, she was assisted by at least two figures from Labor's past, one of the state's former most senior bureaucrats under the old NSW premier Bob Carr, and Morris Iemma's one-time senior adviser.

Architect of the new deal was Dr Col Gellatly, Carr's former director-general of the Premier's Department; the adviser was Ben Wilson, Iemma's ex-media man (and former ABC reporter), now working for the influential PR group Cosway, advising NSW Treasury on its multibillion-dollar "electricity reform project".

Since the middle of 2010, Dr Gellatly has acted as director of the NSW Electricity Reform Project Office, advising the NSW government.

In February this year, Gellatly, then NSW government Head of Privatisation, was a key speaker at a NSW Energy Reform and Outlook Summit, which claimed "the NSW energy sector has come to a crossroad in both public policy reform and generation outlook in 2010 and the state government has put a mandate on the privatisation of the retail sector for early 2011, the ramifications of which will likely affect both state and federal energy markets".

The government's plan was to maintain public ownership of electricity transmission and distribution networks.

Then came the adverse publicity. In March, the NSW media reported that taxpayers would be hit with "the largest electricity price increases in the state's history with power bills set to soar by up to $918 over the next three years". About a third of the rise would be "directly attributable to the federal government's emissions trading scheme".

Federal Climate Change Minister Penny Wong blamed the NSW government for increased network charges; the state government blamed the federal government's planned Carbon Pollution Reduction Scheme.

In May, the Independent Pricing and Regulatory Tribunal reported electricity bills were set to soar "due to a large increase in the cost of supplying electricity and the need to ensure the state's future capacity can be funded".

Soar they did. Cash-strapped consumers featured on television news and in newspaper stories.

Meanwhile, the state cabinet decided to take over the Cobbora coal mine, in western NSW, and on November 16, announced bids had closed for the sale of government-controlled electricity retailers EnergyAustralia, Integral Energy and Country Energy, as well as output from the three generators -- Macquarie Generation, Eraring Energy and Delta Electricity - and some power station development sites.

The NSW government said the mine would produce cheap coal and thus power bills would fall.

Coal-fired pollution and curbing carbon emissions be damned, and so, too, the electricity consumers of the future, who are set to fund the debt of an industry which pundits say will suffer from reducing profitability.

The Premier has watched the federal government struggle to get carbon emissions policy over the line. On other issues, she has shown no hesitation in playing herself off the unpopularity of a Julia Gillard decision. Keneally's tactic, increasingly, is to paint herself as a defender of the rights of the people of New South Wales against the ailing Gillard government.

Yesterday, Keneally attacked Riordan's declaration that he was prepared to endorse Green, independent or even Liberal and National candidates who opposed electricity privatisation, saying he showed "a lack of judgment and leadership that one should rightly expect from someone in his position".

In doing so, she has wedged herself between the powerful NSW union movement and a very hard place.