Struck down by an electric hullabaloo

As the previously vocal Gillard government sits suspiciously on a power networks benchmarking report, the Newman government is flailing to find a price-busting solution.

Someone has been notably silent about this week’s “shock, horror” electricity prices increases affecting 1.8 million Australian households.

The prime minister was very loud about the issue last August and again in December.

She went so far after the Council of Australian Governments meeting before Christmas as to promise all Australians a $250 cut in their annual power bill from 2014 as a result of a reform process for which she claimed credit.

Julia Gillard said she based this promise on a draft Productivity Commission report.

As I have written a number of times, the report, firstly, set the possible benefit to east coast residential customers at $100 to $250 after the cost of smart meters had been met and, secondly, based the savings on the introduction of retail price deregulation, widespread use of new metering technology and resort to time-of-use charges.

The Productivity Commission handed the government its final report on April 9.

The legal requirement is for the report to be tabled in federal parliament within 25 sitting days of receipt – but this deadline is in August, by which time the parliament will be long closed ahead of the election.

Given the importance of benchmarking power networks – the actual focus of the report – and given the use to which the prime minister put the draft for political purposes, why has the government not tabled the final version?

The Coalition is aware that the report is being kept under wraps.

Opposition energy spokesman Ian Macfarlane mentioned this when he spoke at a power pricing conference I chaired in Sydney in late May. So far the Coalition has not asked a question in the House on the issue.

Meanwhile the Newman government is struggling in the coils of its own making three months ago when the Queensland Competition Commission initially proposed a 21.4 per cent rise in power bills for the state’s households on regulated tariffs. 

Campbell Newman, Treasurer Tim Nicholls and Energy Minister Mark McArdle left voters with the indelible impression they would again subsidise the bills, having spent $63 million of taxpayers’ funds doing so in their first year in office.

But shelling out $300 million for a subsidy in the new financial year and the same again in 2014-15 is beyond the means of a state government struggling to move towards a budget surplus.

While media commentators with green interests have been focusing on the attempts by Newman and McArdle to lay the price rise blame on renewable and solar schemes, Nicholls has been at pains to point out that the budget will not only include a $136 million aid package for the most vulnerable consumers but will also allocate a record $615 million for the “community service obligation” to keep rural and regional power prices equal with Brisbane and the rest of the state’s south-east corner.

Now Newman is telling Brisbane journalists that he has a plan to reduce electricity costs but he’s just not ready to reveal it.

The ABC reports him as saying it’s “a long-term plan to put serious downward pressure on electricity prices” and, in the next breath, complaining that this is a national issue.

“It’s a national disgrace and it needs to be dealt with,” he said.

Newman says his government will release its price-busting plan “in the next week to two weeks”.

What no one wants to say to the household and business consumers, of course, is that the outlook for 2014-15 is for power bills to continue to rise, “moderated” by the death of the carbon price, if the Abbott-led Coalition can achieve this, and a slackening of capital expenditure as the present five-year Australian Energy Regulator determination comes to an end.

A worry for environmentalists is that, if the carbon policy is defenestrated by Abbott, the costs of the Queensland solar subsidy scheme – which McArdle claims will add $276 a year to household bills by 2015-16 – will move further into the spotlight.

There are more than 200,000 householders in Queensland being paid 44 cents per kilowatt hour under the feed-in tariff that Anna Bligh’s government introduced. Another 16,000 have embraced solar even under the 8 cents feed-in tariff the Newman government decreed on winning office.

All up, they are the beneficiaries this year of an estimated $160 million in subsidies from the state’s other power users – and that doesn’t include the impact of the PV systems on network charges, a topic on which the Clean Energy Council and the Energy Supply Association are engaged in a war of words, with the latter arguing that the solar users “are not paying their fair share of network costs".

Will Premier Newman’s cunning plan seek to address this?

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