NSW consumers are set to face the biggest increases in household electricity bills ever seen, according to the NSW Independent Pricing and Regulatory Tribunal (IPART). From July 1 this year, bills for those on standard tariffs will rise by a cumulative total of up to 64 per cent by 2013. The increases will allow energy providers to increase investment in infrastructure and improve network security and reliability of supply in line with the new licence conditions imposed by the NSW Government.
The projected rise takes into account the Federal Government’s planned Carbon Pollution Reduction Scheme (CPRS), which still has a start date of 2011-12. But even without the CPRS, power bills would still rise by up to 42 per cent over the three-year period, under changes announced by IPART today.
The rises are greater than those first proposed in December and will send average electricity bills rocketing by between $577 and $918 more by 2013, after including the impact of the CPRS. The increases will also come on top of already significant price rises in July last year.
For instance, Energy Australia bills would rise 60 per cent under a CPRS, adding $754 to a typical household customer’s bill by 2013. Integral Energy and Country Energy bills will rise 46 per cent and 64 per cent respectively over the same period, adding $577 and $918 to typical customers’ bills.
NSW businesses have blamed the forthcoming electricity price rises on the NSW Government’s failure to properly manage electricity assets. According to the NSW Business Chamber, the NSW Government stripped dividends from electricity companies and under invested in necessary poles and wires.
It was timely that the Institute for Sustainable Futures in the University of Technology Sydney launched their latest report “Meeting NSW Electricity Needs in a Carbon Constrained World” in NSW Parliament. The launch received multi-partisan support in NSW Parliament. Members of different political parties attended the event with all agreeing that NSW is at a critical point and must address climate change through various policy alternatives.
The report examined the current projections for energy consumption and generation, and how they differ from the Owen Inquiry results. It then examined peak demand projections, and identified when potential shortfalls may occur. In 2007, the NSW Government established an Inquiry into Electricity Supply in NSW chaired by Professor Anthony Owen. The Owen Inquiry concluded that there was a potential shortfall in baseload supply from 2013/14, and recommended that planning for new power stations should commence immediately as the lead time for a coal-fired power station could be 6-7 years.
What the report found was that meeting the growth in demand with distributed energy is significantly cheaper than building a new coal fired power station or meeting electricity growth needs with gas turbines. The maximum distributed energy scenario considered (energy efficiency, cogeneration, demand side response and retiring 1000 MW of coal fired power generation) saves 7 million tonnes of emissions and $0.5 billion compared to the business as usual approach currently taken by the NSW Government.
The report recommended 7 key reforms to the NSW Government. It is worth mentioning the first two. Recommendation 1: The NSW Government should adopt a target of meeting all forecast growth in energy consumption and peak demand between 2010 and 2020 from “green” energy sources, i.e. renewable energy and distributed energy (including energy efficiency, demand side response, and cogeneration). Recommendation 2: The NSW Government should nominate a suitable agency within Government with appropriate resources and authority to coordinate its Distributed Energy strategy to implement these recommendations.
The authors of the report have highlighted that these economic and environmental benefits will not be realised unless there is deliberate and effective electricity policy reform in NSW. This policy reform does not need additional government funding, but it does require strong and sustained political leadership to break with the centralised energy paradigm of the past.
Reference: Rutovitz, J. and Dunstan, C., Meeting NSW Electricity Needs in a Carbon Constrained World, Institute for Sustainable Futures, University of Technology Sydney, 2009.