The quick kill of an energy efficiency scheme?

An apparent strategic Cabinet leak, citing fresh analysis of the Victorian Energy Efficiency Target, has recommended the scheme be abolished. But that analysis remains suspiciously locked up.

For many months businesses engaged in provision of energy efficient products and services have been waiting on the state government to release its economic evaluation of the Victorian Energy Efficiency Target, as part of a general review of the scheme. The scheme uses tradeable certificates to subsidise the cost of energy efficient equipment to lower overall energy bills and reduce greenhouse gas emissions, and has been running for nearly six years.

Sources within the Victorian Government and industry have told Climate Spectator that the economic evaluation report had been completed some time ago. As part of normal process such regulatory impact statements are usually circulated to interested parties for review before finalisation to ensure all relevant information is considered to improve the robustness of any assumptions made. Yet, so far, this entire process has been an information black-hole for stakeholders. What’s more, it is understood that Cabinet was scheduled to decide on the fate of the scheme a few weeks ago.

Out of this information black-hole, the Herald-Sun has today run a story that appears to have been planted by senior members of the Victorian Government keen to see the scheme axed. The Herald-Sun runs the claim that a Victorian Government report has found the Energy Efficiency Target will slug families $62 per annum on their electricity bills.

This is impossible to reconcile with other public data available on the scheme.

For example, the Australian Energy Market Commission in its review of residential electricity price trends in December 2013 suggests the cost of the scheme on the average household is $12 per annum. Also offsetting the extra cost of the subsidies is that households are consuming less energy because of the energy efficient appliances they’ve installed as a result of the scheme. Prior economic analysis undertaken for the Victorian and federal governments suggested that taking into account the offsetting savings provided by energy efficient appliances meant that householders overall ended up financially ahead.

Because no one outside of government, other than the Herald-Sun, has access to the economic evaluation of the scheme, it is difficult to assess the basis for this $62 figure. It may only apply to a very small number of householders with very high levels of energy consumption and who choose to not take up the offer of energy efficient equipment. The odds are such households would be high income householders, because prior assessments of the scheme have found low income householders have been major beneficiaries of the scheme. Also, low income households tend to consume lower levels of electricity so the subsidy associated with VEET has less of an impact.

Energy Minister Nicholas Kotsiras is quoted by the newspaper as saying that a decision was yet to be made on the program. He stated, “the VEET scheme has delivered for Victorians in the past but whether it will continue to benefit Victorians in the future must be considered objectively and carefully”.

Given the need to “objectively and carefully” review the scheme, one wonders why the regulatory impact statement has not been circulated for feedback and review. Instead the only way people learn about it is via a story with a hard-to-reconcile spin on it.

This kind of selective leaking – which comes on top of the fact that current energy adviser to Premier Napthine (and prior adviser to the energy minister) Greg Hannan, used to work for International Power/GDF Suez (the owners of Hazelwood and Loy Yang B power stations) – will generate considerable mistrust about just how "objective" and "careful" the review of VEET really was.

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