Using Evoenergy and other existing resources to rewire Canberra for a Just Transition
This article is a supplementary submission to Climate Change and a Just Transition.
There will be no just transition and climate justice unless we involve Evoenergy and simplify tariffs so everyone pays the same amount for each kWh of electricity. Government initiatives should benefit all and should not try to target individual groups. The financial system needs to change rather than try to patch up broken, unfair financial practices.
The change must be incremental and start with local groups in a scalable way. The new system must be lower cost. The benefits from the new cost reductions should go to consumers and investors equitably. Existing investors should maintain their profits and potentially increase them.
Individual households and businesses will always own Rooftop Solar Panels, Home Batteries, Electric Cars, and other electricity usage machines.
Rewiring Canberra
To rapidly and equitably rewire Canberra, we need mechanisms for households and businesses to work collectively with the monopoly suppliers, and the simplest way to do that is to allow families and businesses to buy shares in the monopoly suppliers. The easiest way to start is for individual household suppliers to sell their solar panels and batteries to Evoenergy and receive Evoenergy shares in return. The new shares will entitle households and businesses to some of Evoenergy’s profits and a representative voice on the Evoenergy board.
It is recommended that the government allow households and businesses to bring their solar panels into the asset base of Evoenergy and that households take their returns as new shares in Evoenergy. The return on investment will be greater than the existing Regulated Return (currently around 6.5%). The new shares are backed by new assets installed in households. These new assets generate returns, which are distributed as new shares.
The profits are used to increase the electricity asset base and generate new shares for Evoenergy, which both existing shareholders and consumers own. Evoenergy shareholders will benefit because we know solar panels, with local generation plus local storage, will increase profits by more than the regulated amount, and this profit stays in the company as household panels and community storage. It could be structured to be outside the regulated asset base.
Investments in the new Evoenergy will provide a 12% indexed annuity for 17 years, or more than twice the value of an allocated pension.
Individuals and businesses can purchase electric cars and pay for them with their electricity payments to run the vehicles.
Canberra businesses will be able to compete within Australia and overseas because the distribution of profits effectively drops the price of electricity.
Retailers
Retailers are unnecessary as the payment for electricity will be fixed if a household is a shareholder in Evoenergy. All electricity for all customers will be the same, and there will be no flag-fall charges. If people consume electricity at different times, their share of profits will vary instead of changing the price. Retailers can change to become suppliers of systems to local community groups but should share their profits with the local groups.
Market in Shares
Every shareholder must sell 12% of their shares yearly with a minimum amount each month. This provides sellers for buyers who buy and pay with some of their electricity payments. This automatically creates a liquid market for Evoenergy shares.
Banking
There will be no charge for the purchase and sale of shares, and the shareholder accounts will provide an alternative payment system for Canberreans as the funds will be held in shareholder accounts. The Banking will be with a Community Bank where depositors and borrowers own the bank. It is expected the Banks will provide loans for shares as described in “Reducing the Cost of Debt”.
Savings
It is expected that the cost of electricity will stay about the same but that at least 50% of payments will build wealth across the community. Everyone who joins is treated equally on the cost of electricity. Wealth building comes because consumers buy shares with each payment of electricity.
Evoenergy
Existing Evoenergy shareholders will benefit as they can sell the gas network without issuing new shares for gas consumption. The consumers of gas do not get shares when they consume gas.
Evoenergy shareholders will be able to sell their shares. Still, those who keep their shares will get higher, more consistent returns than the Regulated returns, have fewer compliance costs, and may decide to drop out of the National Energy Market.
Evoenergy shares will give a higher return than the regulated market price, and Evoenergy shareholders will benefit from the new system. The cost is that they have to sell their existing shares gradually. However, they can still purchase shares if there are no local buyers.
ACT Government
The ACT Government will not need incentives to change to renewables as renewables will outcompete the National Energy Market. The ACT Government can use the same approach in other areas, including land and water. It can remove all government debt and have a place to invest super funds to give pensioners greater returns. The ACT government will save hundreds of millions of dollars from cheaper electricity and reduced subsidies and incentives to businesses and disadvantaged communities.
Affordable Housing
The same approach works for housing, and it will drop the cost of buying a house by 50% while increasing investment returns for investors in housing. There will be no decrease in the price of homes, but they will stabilise and change with inflation. It will release massive amounts of capital for infrastructure projects like Rewiring Canberra and Light Rail, benefiting the construction and transportation sectors.
Economic Planning
The economic modelling for the Rewiring of Canberra used agent-based modelling. This form of modelling means that the models will mirror the real world of finance exactly, and it will help governments make better policy decisions, target areas of need precisely, and monitor the outcomes. Businesses and Households will have access to models of their business or household, and they can plan their purchases and investments to fit into the whole.
Strengthening Local Communities,
The new Evoenergy is expected to organise communities that match the electricity grid and set up governance structures that will direct local investment and the spending of profits. These community bodies will inevitably branch into other areas to build stronger neighbourhoods.
Electricity Resilience and Reliability
It is expected that within a few years, the ACT will be self-sufficient in energy and able to operate for several days without electricity from the transmission lines. The ACT will have lower electricity costs and a financial system that uses existing capital efficiently.
What if Evoenergy disagrees
The best systems changes build on what already exists. It is expensive and inefficient for any organisation other than the distributor to operate the electricity system, which includes solar panels, community batteries, and other production and consumption devices.
Suppose Evoenergy are not interested in working with the community to incorporate community resources. In that case, the approach can still go ahead without them but at a more significant cost and loss to the Canberra Community.
Has This Been Done Before
This is an old idea. One example was the funding of Public Works in Pennsylvania before the American Revolution.
In Australia, Sir Denison Miller, the first governor of the CBA — the precursor to the Reserve Bank — engaged the community by guaranteeing the payment of interest on deposits in the CBA. The money was used to back the creation of money by the CBA, which various state and federal governments spent on paying Britain for Australia’s contribution to the First World War! Then, ports, roads, and other public infrastructure were developed to rebuild and develop Australia. In effect, the community funded the boom in asset building in the early years of the CBA.
The approach was taken by Singapore, Japan, South Korea, China, Europe, and other devastated countries after the Second World War. Australia did it after the Second World War but lost its way with the banking changes in the 1980s and the mishandling of the implementation of the Crawford Report.
The essential feature is building political and economic structures so all citizens can gain wealth equitably. In the modern world, the method provides immediate sharing of profits between investors and buyers of goods and services at the point of sale. The approach can start with government-controlled or regulated industries, and it will soon spread because it more than doubles the productivity of investment.
Summary
A Just Climate transition cannot happen with the existing financial system. We must change it so that consumers who pay for it benefit because investors share the profits. Sharing profits doubles the investment as money moves rapidly, and less is spent on consumption as investment is automatic. Because there is more investment for the same amount of money, everyone can benefit when investors share their profits.
