SENSIBLY, the Australian Industry Group has recommended the Queensland Government privatise its $2 billion electricity transmission business, Powerlink.
The proposal should also extend to the state's electricity distribution businesses, Energex and Ergon.
Like Powerlink, these are regulated monopolies and may be worth $20 billion to private bidders.
Work by Carbon Market Economics director Bruce Mountain and Stephen Littlechild, England's former chief electricity price regulator, indicates electricity distribution costs in Queensland are excessive.
Private ownership of the regulated ''poles and wires'' monopoly assets in Victoria and South Australia has brought greater cost disciplines and the southern states' prices have risen more slowly than in Queensland.
Privatisation of Queensland's electricity distributors and Powerlink would restore the state's credit rating and provide Budget relief, while also restraining soaring electricity bills.
AIG also recommended the Government sell its electricity generation assets, Stanwell-Tarong and CS Energy. These coal-based generation assets have a book value of more than $6 billion but their market value is difficult to quantify.
Fears of a carbon tax and other federal and state measures that discriminate against coal-generated electricity have brought precipitous falls in the value of these power stations.
Among the federal measures is the requirement for high-cost renewables to comprise 20 per cent of electricity supply by 2020. This will boost direct costs to the consumer by $130 a year as well as increasing costs of everything that incorporates electricity.
In addition, Queenslanders have over-generous feed-in tariffs for roof-top solar panels and an obligation to use high-cost gas, measures that visit additional charges on the average consumer.
The carbon tax would come on top of this. According to Treasury this will cost Queenslanders $863 a year.
For the state-owned, coal-based generators, these imposts undermine value by restraining their earnings and adding a massive investment risk. Queenslanders, as owners of the state's coal-fired stations, incur these losses.
Without the regulations requiring high-cost power sources and the carbon tax threat for electricity, Queensland's state-owned generators would be worth more than $10 billion.
But, as a result of the prospective carbon tax, those generators today may be worth only $5 billion -- a loss of between $5 billion and $6 billion, or more than $2000 for every household.
The impending carbon tax has already had a heavy impact on the worth of NSW's generators -- halving their value. In South Carolina, US, a form of carbon tax resulted in the state government selling two new coal-based power stations for scrap value.
Queensland, with the world's lowest-cost large-scale coal deposits, should be a magnet for energy-intensive industries and for businesses seeking to generate cheap power for households and industry.
Federal and state government action is preventing such investment and reducing the value of the existing power stations that Queenslanders own.
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