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Soaring power prices caused by “decade of policy instability”

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A new report has ranked the Abbott Coalition government’s winding back of the renewable energy target, and repeal of the national carbon price, as among the biggest drivers of Australia’s relentless rise in wholesale electricity prices.

electricitypricemovementACOSS

The report, Empowering disadvantaged households to access affordable, clean energy, calls on the federal government to end the political deadlock on Australia’s low-carbon energy transition, as a crucial first step in providing urgent relief for thousands of families suffering “energy stress”, as power bills soar.

“There has been a fundamental failure to provide adequate measures to reduce energy stress, and deliver a national coordinated stable energy and climate policy which is a major factor in pushing up energy prices,” said Cassandra Goldie, the CEO of the Australian Council of Social Service (ACOSS), who produced the report alongside Brotherhood of St Laurence and The Climate Institute.

“Low-income and disadvantaged households are bearing the brunt of mismanagement and will be further disadvantaged if the desirable transition to a modern, clean electricity sector is not well managed, inclusive and equitable.”

powerpricebreakdownACOSS

The report comes at a time when the Conservative Right, including former Prime Minister Tony Abbott, are resurrecting their campaign against renewable energy as “the most expensive and least reliable” source of electricity, and their narrative that cheap power can only come from coal-fired power plants (a myth that was neatly skewered by EnergyAustralia CEO Catherine Tanna, just last week).

“The Liberal Party has to be the party of cheap power, let Labor be the party of expensive power,” Abbott told Sydney’s 2GB radio in June. “I’ve spent a lot of time talking about electricity and the last thing we want to do is let electricity off the hook”.

Certainly, the mainstream media is not letting renewables off the hook in the power price debate. Monday’s editorial in the Brisbane Courier-Mail declared that “Labor’s zealotry on renewable energy targets is sending the country broke,” next to the statistic that more than 464 Queenslanders a week are having their electricity disconnected.

ACOSSaverageprices

But as the ACOSS report notes, the major political parties’ endless “talking about electricity”, culminating in the commissioning of the Finkel Review and the latest meeting of the state and federal energy ministers, has been a major part of the problem.

“The lack of policy certainty is now one of the biggest drivers of wholesale electricity price rises,” the report says.

“A decade of policy instability; regulatory inaction; failure to better align climate, energy and social policy; and blame-shifting among federal and state governments is central to the deterioration of every element of the energy trilemma.

Like many major studies before it – this one was done in consultation with more than 120 community, environment and energy experts across Australia – the ACOSS report names the biggest drivers of higher power bills as increases in wholesale, retail and network costs, and calls for reform in all three areas. And like other major reports investigating Australia’s high power prices, rolling back policy support for renewables like solar and wind – now recognised as the cheapest forms of new energy generation – is not recommended.

CostofgenerationACOSS

“There are many factors behind the rise in electricity prices, including high gas fuel costs, sudden tightening of the supply-demand balance caused by generators exiting at short notice, decreasing competition and the exercise of market power, excessive expenditure on network capacity, and, in South Australia, a greater need for ancillary services coupled with an underdeveloped framework for their provision,” the report says.

“However, an overarching driver of higher prices is the lack of a reliable policy and regulatory framework that supports efficient investment in clean energy and supporting technologies. This, in turn, is related to weaknesses in the system of governance of the electricity sector.”

The report goes on to say that without policy adjustments across each element of the electricity supply chain – wholesale, network and retail – “unnecessary and unfair costs are likely to increase,” in turn increasing the number of people struggling under some degree of energy stress.

“Reducing the uncertainty requires the integration of climate and energy in ways that solve each aspect of the energy trilemma – affordability, emissions reduction, and security and reliability – and in ways that are consistent with the long-term climate objectives to which Australia has committed through the Paris Agreement.”

“Unless there is a nationally coordinated plan that is fair and inclusive – and far better integration between climate, energy and social policy – vulnerable households will be left behind,” said the Brotherhood of St Laurance’s head of energy and climate change, Damian Sullivan.

“Australia can do better. Energy is an essential service, so we must make clean energy available and affordable for all.”  

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  • Grace McCaughey

    Ignorance in conservative politics is heartbreaking! There needs to be intelligence testing for politics candidature.Fossill fuels are killing hundreds of thousands of people around the world, still they take no notice. What can I do?

    • Andrew Roydhouse

      It is the donors to all major political parties that are the problem. Fossil fuel companies and their consultants etc donate HEAVILY to all major political parties on a Fed and State basis.

      What people do and what people say (Pollies) are often the opposite. If you look at the graphs the bulk of the price blowout happened from 2007 to 2011. The Libs just carried that fine example forward although from what is said by the ALP today you’d be forgiven for thinking they did things to keep the price down.

    • Sally Noel Triggell

      It is not ignorance it is corruption on an unbelievable scale, we are talking billions being stolen here. The world has not seen this sort of corruption since firestone and others bought up the LA. underground mass transit system and shut it down.

  • Andrew Roydhouse

    Notice the BIG mistake – proof reading seems to be a dead art these day?

    Top graph (Figure 3 from ACOSS report’s overpaid consultants) the title says 1999 to 2017 and the X axis is labelled from March 2007 to Sep 2017.

    OOPS….

    How to lose credibility in front of those paid huge sums to try and discredit renewable energy.

    • Dave F

      Thanks Andrew, looks like that’s now been fixed in the report.

      Your reference to “huge paid sums” has me wondering: is there something we should know about those nasty analysts at ACOSS, the Brotherhood of St Laurence or The Climate Institute? Or was this more a generic snipe at people trying to provide a useful insight into a complex issue?

      • Andrew Roydhouse

        Having seen first hand (and paying for) the fees charged by consultants for reports – I (and you?) would hope for greater accuracy in the material produced.

        I suspect that report cost high tens of thousands if not more.

        Getting the details right (and proofed) is especially crucial for what is arguably either the most important or 2nd most important item in the report.

        If an error like that goes unnoticed after who knows how many people signed off on the report (at least 4 normally for a high-profile one) – then it begs the question what other oversights were made.

        Not the result I would have expected after paying the fee.

        “This project was funded by Energy Consumers Australia Limited as part of its grants process”

        BTW- ACCOSS salaries are competitive “in the marketplace” as their recruitment adverts state (and demonstrate).

  • MaxG

    Like I said before: get rid of the retail leeches and we’ll save 30% on that alone.