The Queensland government has ruled out making retrospective cuts to the state’s Solar Bonus Scheme, immediately after the measure was recommended in a report into driving down power prices.
The Queensland Productivity Commission’s Electricity Pricing Inquiry Draft Report, released on Wednesday, made 54 recommendations to government, including a review of its 50 per cent renewable energy target by 2030, and cutting short its Solar Bonus Scheme ahead of the planned 2028 closure.
“There are some elements of the report that will be immediately ruled out by this government because they do cut across election commitments we made to the people of Queensland,” Treasurer Curtis Pitt said.
The report – which was commissioned in April 2015, on the back of electricity price rises of more than 80 per cent since 2006/7 – also recommended the government commit to deregulation of retail power prices in the state’s south-east almost immediately.
The Productivity Commission said that price was “acting as a barrier to customers realising the benefits of innovation evident in other de-regulated markets.”
However, the Produtivity Commission, while acknowledging that most of the power price rises came from increased network charges, did not recommend major changes to network management, apart from supporting the consolidation of the two network – Ergon and Energex – into a bigger monopoly company.
It also “cautioned” against the adoption of new business models that reflect the adoption of new technology.
The QPC recommended the government should not intervene in the market to achieve its one million residential solar rooftops target, or the additional 3000MW of residential and commercial PV target, by 2020.
It said that, without intervention, the 3000MW amount had been projected to be met by 2022, two years later than the government’s target date.
The QPC also said it believed the Solar Bonus Scheme had done its job by stimulating the local industry and helping to make solar more affordable, and should therefore be considered early closure.
“The QPC estimates that by the middle of 2020, most participants will have recovered the costs of their systems,” there report said.
The report also claimed that the Solar Bonus Scheme had added around $89 to an average household bill and around 9 per cent for an average business customer in 2015-16.
On the Queensland government’s 50 per cent renewable energy target by 2020, the QPC said its modelling suggested an average increase in retail electricity prices of 0.5 per cent for households and 0.3 per cent for industry – and a reduction of 0.7 per cent for commercial customers – for the period 2015–16 to 2034–35 was required to meet the target.
“The report notes the benefits of a national approach rather than Queensland ‘going it alone’,” it said.
The report also recommended preparing regional Queensland for market competition, by encouraging more retail companies to the market.
The Palaszczuk government’s rapid-fire decision to rule out both the recommended early closure of the Solar Bonus Scheme and the review of the state’s RET has been welcomed by the renewables industry.
“The Queensland Government is absolutely right to rule out this crazy idea on day one,” said the Australian Solar Council in a statement on Wednesday.
“Queensland families made major investment decisions in good faith on the basis of government guaranteed contracts for the life of the Solar Bonus Scheme.
“The Productivity Commission is completely out of touch if it thinks it’s ok for the Government to tear up contracts with hundreds of thousands of Queenslanders.
“As we’ve demonstrated time and time again, the Solar Council will stop any attempt to retrospectively cut feed-in tariffs. This is a threshold issue,” the ASC said.
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