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Source:
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SMH
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Date
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20/01/2010
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Consumers will soon start paying a lot more for electricity. In NSW, EnergyAustralia, Integral Energy and Country Energy customers will be paying an additional $727, $554 and $893 a year by 2013. Other states are also announcing massive rises. Most headlines blame environmental costs such as the ETS and solar feed-in tarrifs - but they are wrong. There's a more pernicious dynamic at work.
What they are revealing is a bankrupt electricity supply system and a regulatory framework that is out of synch with modern needs.
The largest cause of the prices rise is investment in infrastructure, not the proposed emissions trading scheme, even though the power stations are one of our biggest greenhouse polluters.
The questions we should be asking are - what can we do about the utilities' desire to keep building up the fossil fuel power generation system? Is this good for consumers and combating global warming?
Some of it is for maintenance, but most is to entrench and expand the current power system. More than $40 billion is proposed to be spent on capital investment.
The companies, however, only propose to spend a minimum on energy saving measures, despite them being four times more cost-effective than building more "poles and wires". Energy Australia, for example, is proposing to spend less than 0.5 per cent of their budget on energy efficiency. If we use electricity more wisely then we won't have to expand the system as much.
The expenditure bids are supported by the Australian Energy Regulator, which is part of the National Electricity Market (NEM) - a little known but very important influence on our electricity system. It was set up and is maintained to support the status quo. It's supposed to look after the long term interests of consumers, but it doesn't.
For example, even if energy efficiency is cheaper and renewables safer for the environment, the NEM treats all options as equal. In reality, this means the established polluting coal sector gets a head start and new approaches better for consumers and the environment are sidelined. This situation is repeated across Australia with almost $40 billion to be spent on the current system in coming years. The NEM has an intricate set of rules and processes that inhibit the development of an environmentally and socially responsible electricity system.
So how do you get energy efficiency and renewables to be part of the mainstream?
With the failure of the energy regulators and their ministers, governments have had to resort to intervention. We have rebates for solar panels and gross feed-in tariffs covering all solar power produced. The federal Labor Government introduced a law requiring electricity retailers to source 20 per cent of their power purchases from renewable sources by 2020. Several states have adopted energy efficiency laws also mandating energy savings by retailers including NSW, which has a target aimed at counteracting growth in demand. This should help push out the need for a new power station to beyond 2017 (another massively expensive piece of infrastructure that will feed into power bills).
Nevertheless the NEM continues to sponsor greenhouse polluting power. It's like a long arm from another universe distant from the real world priorities of today's society. Only recently the regulators agreed to exempt 40 per cent of proposed expenditure by distribution companies from a test to see if energy efficiency was cheaper and reliable. A major thrust in their expansion plans is to provide peak power used on hot days. However, there are proven savings that can be made with other consumers such as in industry that can free up generation on such days.
Nor are these poles and wires companies subject to any legal requirements to help con
serve power. They should be.
Electricity is not perceived by the community or regulators like we regard water. We can see and feel drought and when water is running out. In response the community has taken substantial action to conserve water and reduce demand.
Polluting energy needs to be seen the same way. We should be concerned about ruining Australia through climate change and the real reason power bills are increasing so dramatically. And those who dominate and regulate the National Electricity Market should also feel the heat.