Is the energy minister wrong about electricity?

HAS anyone else noticed that our State Energy Minister has been campaigning hard against policies that promote renewable energy?

The renewable energy target, the carbon price, and feed-in tariffs have all been singled out for a serve, couched in the usual political clichés - "struggling Queensland families" and the like.

"So what? Isn't that valid?" I hear you ask.

Weeeeeell, no. I don't think so. It looks more like politics and ideology than anything more serious. Let me explain.

Firstly, for anyone serious about reducing the electricity prices paid by consumers, so-called "green schemes" are an odd thing to focus so much attention on. That is, they are an odd target unless you are primarily motivated by a desire to resist the policies of your perceived political opponents.

While Mr McArdle has been known to claim "Green schemes, including the Carbon Tax, are currently the largest electricity cost drivers", in truth the largest component of retail electricity prices is the cost of the distribution network.

It accounts for $51 of every $100 we spend on electricity, and in the assessment of the Australian Energy Regulator (at 3.58), it is "the main contributor to price increases in all states" due to "weaknesses in the regulatory framework" that encourage network providers to spend more than necessary on the network.

Secondly, the way the Energy Minister chooses to present his information betrays a distinct absence of balance.

For instance, this week's media release on the alleged financial impact of the feed-in tariff was all reported in terms of the biggest available numbers: "more than 12%" per year added to electricity bills.

But the graph that accompanied the release (which we have to take on faith because the full report from the QCA to the Minister was not made public - I called QCA and asked for it) shows that figure drops to closer to 6% by 2020.

The graph ends there, so who knows how low it would have gone beyond that time.

But the Federal Bureau of Resources and Energy Economics has reported that by 2030 solar panels will provide the cheapest electricity in Australia.

Thirdly, I have some questions about the accuracy of these figures anyway.

Are we just talking about the impact on the retail component of electricity prices and ignoring the wholesale component?

Wholesale prices have been on a downward trajectory for a few years and renewable generation is getting some of the credit. A number of submissions to a recent Senate inquiry into electricity prices (from 3.77) also picked up on this dynamic.

The carbon price (as opposed to schemes that directly facilitate deployment of renewables) has undoubtedly pushed up electricity prices, although not as much as expected. That means the tax cuts and so on that came with the carbon price are now overcompensating us to an even greater degree than originally thought. More money in our pockets AND fewer greenhouse gases in the atmosphere. Nice one.

To be honest, I personally would be prepared to accept higher electricity prices as part of the cost of responding to climate change anyway (subject to appropriate help for households that really can't afford it). Climate change doesn't give us any free options. We pay to reduce our emissions, or we pay more as escalating climate change damages our economy.  So I'm not really objecting to the very notion that a switch to renewables might cost more in the immediate future than carrying on burning coal.

But why expend all that Ministerial effort making it look worse than it is, opposing every policy on the table while proposing no alternatives, especially when there are real regulatory problems with far greater responsibility for escalating electricity prices that could be tackled with cross-partisan support?

Adam Stone is the lead senate candidate for the Queensland Greens in the upcoming federal election.


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