A sharp price spike to populist politics

Power prices are surging in Queensland and its government is looking to deceptively shift the blame to renewables and the carbon price. In reality, it just shows why politicians should never suggest they can control the cost of living.

The Queensland utility regulator, the Queensland Competition Authority, has authorised what it terms “sharp” price rises for those customers still on regulated tariffs (30 per cent of residential customers).  But it has provided somewhat of a reprieve for solar PV owners, backing away from the idea of charging them a separate network charge. However, it is still recommending solar owners be forcibly shifted to another tariff structure which would most likely leave them worse off.

According to the QCA, the typical household on the regulated tariff, consuming about 4,250kWh per annum, is likely to see an increase of 22.6 per cent (or $268) in their annual bill. On top of this there will be price rises of 13 per cent for their usage of energy for off-peak hot water or pool pumps.

For small businesses and those businesses in regional areas outside of the Energex service area, prices will rise between 13.1 and 17.4 per cent.

With such bad news on the way, no wonder Queensland’s energy minister Mark McArdle tried to pre-empt the report by putting out a press release the day before claiming prices were rising because of the carbon tax, and support schemes for renewable energy. All of this, according to McArdle, was the fault of the federal government and the prior Labor Queensland government and beyond his control.

But now that the QCA’s report is out we can see in a wonderful infographic below just how desperate McArdle must be to shift the blame. 

Individual components behind the change in residential electricity prices

Graph for A sharp price spike to populist politics

Source: Queensland Competition Authority

Of the $268 rise in a typical household bill next year, emission reduction measures are minor:

-- $9 or just 3.3 per cent is due to that economy-destroying carbon tax (for which households have been compensated);

-- There will actually be reduction in bills of $6 associated with the declining costs of the Renewable Energy Target (RET) and the Queensland Gas Target; and

-- The solar feed-in tariff will add $32. 

This is overwhelmed by the $60 rise just in the costs of energy retailers such as Origin Energy, let alone the $127 incurred by the state government-owned network businesses.  

It is true that the solar feed-in tariff costs will rise further, although this will be moderated by people forfeiting their tariff by moving house. And these soaring costs are partly the fault of decisions of the current Queensland government.

The Queensland government faces the same pickle that Kevin Rudd got himself into – suggesting government can control the cost of living (remember Petrol and Grocery Watch?). This is recipe for disappointing the electorate. 

The reality is inflation is low by the standards of the last 30 years, but many self-titled battlers feel the cost of living is soaring. This isn’t helped by tabloid newspapers, in conjunction with Today Tonight and A Current Affair, reinforcing people’s biases. 

You can never win with such beliefs. If electricity prices are going down they’ll be complaining about petrol prices. If petrol prices are down they’ll complain about groceries. If groceries have barely risen, they’ll buy their $1 per litre milk while still complaining they’re soaring, and then move onto house prices. 

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