The Campbell Newman government in Queensland was up to its normal tricks on Wednesday, using the compliant Murdoch press to launch another tirade against the carbon price and green energy schemes as cover for another big rise in the state’s electricity prices.
Private briefings by the Queensland government, including from the Treasurer Tim Nicholls, succeeded in getting the following written as the lead paragraph of the Courier-Mail’s story, and similar reporting elsewhere, including the AAP, ABC and Fairfax, who had to play catch up:
“Power bills in Queensland are set to surge by an average of $270, with most of the slug caused by green schemes, including the carbon tax,” the News Ltd paper shrieks.
Here’s what the Queensland Competition Authority actually says in its report, which recommends a 13.5 per cent increase in tariffs from July 1, 2014. The impact of the carbon price, even if not repealed, actually goes down, not up, and so does the impact of the renewable energy schemes. In fact, more than two thirds of the price rise to consumers is caused by factors completely unrelated to the carbon price or any green schemes – it is caused by soaring generation costs, network costs, and increased costs from retailers and billing centres.
The only “green scheme” to show a rise is the solar feed-in tariff, and Newman can claim responsibility for that, because it was he who incited a gold rush of rooftop solar after giving Queenslanders more than 6 weeks notice that the overly-generous feed-in tariffs would be closed.
It’s important to note that the predicted rise in wholesale energy costs, which goes against the grain of recent trends, is caused almost entirely by the Queensland gas boom, in particular the development of LNG export facilities, which will cause domestic gas prices to surge.
And, as the QCA says, the impact of soaring gas prices will actually be reduced by the impact of renewables: “The surge in wholesale energy costs is expected to be offset to some degree by modest decreases in other energy-related costs. These include the renewable energy target (RET) scheme costs and the costs of complying with the Queensland Gas Scheme, which will be closed on 31 December 2013,” the QCA report says.
No doubt, News Ltd could lead with that tomorrow, but it will likely focus on the following.
“The second major cost driver is the Queensland Government’s Solar Bonus Scheme. The scheme’s costs have almost doubled since 2013-14 and will continue to push up prices in future years as distributors recoup costs incurred in paying feed-in tariffs to solar customers. The impact of the Solar Bonus Scheme on network tariffs is expected to peak in 2015–16, at which time about 25% of Energex’s network prices will be due to the Solar Bonus Scheme.”
It also points to (non-solar) increases in network costs as the third major cost driver. It notes Network prices are increasing because of lower than forecast consumption which means that network charges must increase to recover the allowed revenue. This leads back to the issue of network write downs, raised in this story from the Grattan report.
A quick read of the QCA report shows that the service charge for retail consumers has also been lifted by more than 60 per cent, from 50.2c/day to 83.4c/day.
The QCA determination also highlights what a mess the Federal Government’s proposed “retrospective” repeal of the carbon price would be, particularly in the electricity industry where tariffs and contracts are already written.
To try and overcome its problem, the QCA has published two two sets of retail prices, one with a full pass-through of carbon costs, the second to apply after the carbon tax is repealed.
“It is important to note that the QCA does not have the power to change retail prices mid-year, so in order to do so we would require a new delegation from the Minister for Energy and Water Supply if and when the carbon tax is removed. Alternatively, the Minister could choose to make a new price determination using the carbon-exclusive notified prices calculated by the QCA,” it says.
Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.