Craig Kelly, who chairs the Coalition’s climate and energy committee, says there are households that can’t afford heating.
“People will die,” he told ABC radio today.
But a new expert analysis of power prices suggests it’s high gas prices – and not the growing share of renewables – that are pushing up energy costs.
Kelly cited recent reports that showed one-in-four Australian households would be frightened to turn on heaters because of the high cost.
Subsidies for renewable energy totalled $3 billion this year, the MP said.
“That pushes up the price of electricity to the consumer.”
However, Australian National University academic and energy analyst Dr Hugh Saddler believes it’s the price of gas driving up electricity prices.
What’s more, Saddler says that’s the way the energy market is designed to work.
He examined power prices in South Australia in an update on his regular national energy emissions audit for the Australia Institute.
He found a “stunning correlation” between the movement of wholesale gas prices and electricity prices in a state with the highest penetration of renewables.
“The correlation between the two data series is striking.”
It confirmed that higher wholesale electricity prices, and hence higher retail prices in SA, were almost entirely caused by higher gas prices.
When power prices were compared with the share of wind generation, there was no match at all.
Saddler says the national electricity market’s formation in 1998 was followed by a rush of new gas power stations in the eastern states.
“So this is not a malfunction of the national electricity market, but precisely how it was expected to operate when set up,” he said.
“What has changed is the price of gas, driven up by export contracts.”
Deputy Prime Minister Barnaby Joyce disagreed with Kelly’s warning, but says governments had to be responsible for implementing policy that ensured affordable power.
Opposition energy spokesman Mark Butler accused Kelly of scaremongering.
“This is another appalling intervention,” he said, noting the MP’s position as chair of a Coalition policy committee.
Butler conceded households and businesses face high power costs, blaming “policy paralysis” at the national level.
Kelly’s comments come ahead of a meeting of state and federal energy ministers in Brisbane on Friday to discuss the recommendations of Chief Scientist Alan Finkel.
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