Electricity prices – Some facts please! Media Brief

Jun 15, 2011 - 11:25am

The independent Climate Institute today called for an end to the scapegoating of the Renewable Energy Target for rising electricity prices with state and national studies showing network and fuel cost impacts dwarfing those of clean energy policies. 

New reports from the Australian Energy Market Commission (AEMC) and the NSW Independent Pricing and Regulatory Tribunal (IPART) confirm that the policies to unlock Australia’s world class renewable energy resources make up a relatively small fraction of household power bills. 

According to IPART, in 2012 the Renewable Energy Target will account for around 4% of the average household energy bill in NSW. This amounts to less than $1.20 a week.

The AEMC report also shows that blaming the Renewable Energy Target for rising electricity prices is misplaced. Between 2010 and 2013 electricity prices in NSW are expected to rise by close to 40%.  Three quarters of this increase is due to rising infrastructure costs and rising coal and gas prices – factors completely unrelated to climate change and renewable energy policies. 

The story is similar around the country. Nationally, the AEMC estimates that close to half of the total increase in electricity prices over the period 2010-2013 is due to the unprecedented investment in ageing network infrastructure. Close to another 20% of the price rise is due to rising coal and gas prices. 

To put this in perspective, these two factors – network infrastructure charges and fuel costs – will add close to $280 a year to the average household’s electricity bills over the period 2010-2013, which is 6 times the impact of the RET. 

In his recent report Professor Garnaut expressed alarm at the impact of the massive investment in network infrastructure on household energy bills, pointing to “an enormous incentive for over-investment” by network businesses. Professor Garnaut went on to point out that “the cost of those high levels of investment and the high rates of return are passed straight on to the electricity consumers.”

As tempting as it is to blame renewable energy for the current price increases, it’s important that we do let facts get in the way of a good story. 

For further information:

Will McGoldrick | Policy & Research Manager, The Climate Institute | 03 9600 4039

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