Electricity Price Rises Can’t Continue – Gillard

The fur flew on Tuesday after Prime Minister Julia Gillard said rapidly rising electricity prices were a threat to the Australian economy.

In a major speech to the Energy Policy Institute of Australia regarding electricity prices, Prime Minister Gillard accused some State Governments of increasing their revenue at the expense of the family electricity bill.

Ms. Gillard said she had written to the Premiers and Chief Ministers demanding solutions on the table for the Council of Australian Governments (COAG) to adopt by the end of this year.

In a follow up email from her office, the Prime Minister stated:

“Australia did not need power price increases of around fifty per cent over the last four years – and households can’t afford the same kinds of increases over the next four years.. Today I’ve said that massive prices rises have to stop.”

Ms. Gillard pointed her finger at the “gold-plating” of electricity infrastructure being a major driver of price hikes, rather than the carbon price and green initiatives such as supporting the uptake of solar panel systems:

“These energy price rises are well above the cost of the introduction of the carbon price and taking action on climate change. 9c of every dollar in an electricity bill is for the carbon price – and that’s fully compensated – while 51c is for the poles and wires.”

The Prime Minister also pointed out a quarter of all retail electricity costs is spent to meet the costs of peak events that last for a few days a year.

“One sixth of our national electricity networks – $11 billion in infrastructure – caters for peak events that last for barely four days per year. It’s like building a ten lane freeway – but with two lanes that are only used or needed for one long weekend.”

As we’ve pointed out previously, it’s this peak power demand issue where solar power truly shines as solar panels generally generate the most (and cheapest) electricity during peak consumption periods.

While the renewable energy industry and consumer groups generally welcomed the speech; State premiers were scathing.

West Australian Energy Minister Peter Collier called the move political blackmail and said the Prime Minister “has the credibility of a cane toad”.  Queensland Energy Minister Mark McArdle pointed his finger at the carbon tax, as did Victoria’s Premier and NSW Energy Minister Chris Hartcher, who also accused the Prime Minister of hypocrisy.

Opposition Leader Tony Abbott referred to the speech as ”gold medal hypocrisy for the Prime Minister to blame the states”.

The Clean Energy Council issued a statement saying the meeting of the Council of Australian Governments at the end of the year will be a critical opportunity to embrace reform.

“These are changes which can not only help to contain price rises for consumers, but unlock the economic, social and environmental benefits of cleaner, smarter energy systems,” said Clean Energy Council Chief Executive David Green.

The REC Agents Association (RAA), welcomed the Prime Minister’s call for action on soaring power prices.

“The cost of producing electricity is falling but the cost of transporting electricity through monopoly network businesses is out of control, driving up power bills.” said Ric Brazzale, President of RAA.

“Rising residential power prices have been caused by massive investment in electricity poles and wires, which has been passed on to consumers through higher charges. Government schemes that support solar and energy efficiency have been successful in keeping a lid on wholesale power prices, which are at their lowest level in real terms for more than 10 years.”

Research recently published by RAA shows the escalating use of solar energy and energy efficiency are contributing to reducing wholesale power prices and electricity consumption across Australia.