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SA Govt pushes emissions scheme to combat $150 power price hike

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A prediction that South Australians will soon pay $150 more for electricity is further proof of the need for a national emissions intensity scheme, says South Australian Energy Minister Tom Koutsantonis.

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The Australian Energy Market Commission 2016 residential electricity price trends report has found the closure of Victoria’s Hazelwood coal-fired power station will contribute to SA power bills being about $150 higher in 2018/19 compared to a national average increase of $78.

The report predicts electricity costs for SA households on market contracts will increase by 7.2 per cent in 2017/18 because of the Hazelwood closure, before dropping by 2.2 per cent in 2018/19 as more wind generation enters the market.

But ultimately power bills for SA households will rise by 2.4 per cent annually over the two years to June 2019, adding about $150 to the average bill.

Koutsantonis says people are paying the price of the Federal Government running a “scare campaign” and not supporting a national emissions intensity scheme which would drive down energy costs.

The commission ‘s residential electricity price trends report released today warns of price increases across the nation in coming years, although it also predicts an easing in price pressures in 2018/19 due to more wind generation coming into the market.

Victorians will pay an extra $99, while Queenslanders will face an extra $28, thanks to the upcoming closure of Australia’s cheapest power generator.

“Across the national electricity market the generation mix is changing – with the large-scale renewable energy target leading to substantial investment in wind generation,” commission chairman John Pierce said.

“This is contributing to the closure of coal-fired plants and increasing wholesale and retail prices.”

Federal Energy Minister Josh Frydenberg said the government was trying to keep prices down while maintaining energy security.

He said an increase in coal royalties in Victoria and and increased renewable energy target had forced Hazelwood’s French owners Engie to shut the plant down.

However, Koutsantonis pointed the finger for price rises at the Federal Government, saying the commission’s report highlighted the need for national energy market reform, including consideration of an emissions intensity scheme.

Such a scheme has been supported by Australia’s chief scientist Alan Finkel in his preliminary report on the national electricity market last week, but it has been rejected by the Federal Government amid disquiet that it would represent a new “carbon tax”.

Analysis of such a scheme showed it could save energy consumers about $5 billion over 10 years.

Koutsantonis said it wasn’t a tax, but rather a way for electricity generators to trade credits to comply with a baseline of acceptable carbon emissions.

He said an emissions intensity scheme would put downward pressure on prices.

“There have been two significant reports released in the past fortnight;; one that shows prices across the country are increasing and another that shows the path to decreasing prices,” he said.

“Malcolm Turnbull commissioned Australia’s sharpest minds to come up with a response to these issues and now they refuse to even discuss the proposed solutions.

“Unfortunately we have a Federal Government that is incapable of acting in the nation’s interest and consumers will now pay.

“The nation is seeing wholesale electricity prices rise as coal-fired power stations close and companies refuse to reinvest in new generation due to a lack of policy certainty.”

In November, Engie Australia chief executive Alex Keisser said the 50-year-old Hazelwood was “no longer economic to operate”.

“Engie in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation,” Kesser said at the time.

“Given current and forecast market conditions, that level of investment cannot be justified.”

The nation’s energy ministers will discuss the Hazelwood closure and the impact of renewable energy on the South Australian blackout at a meeting in Melbourne today.

The Council of Australian Governments energy council will also look at regulations around new interconnectors, and efforts to ensure cheaper gas supplies.

“(This meeting) comes at an important time following the South Australian blackout and the announced closure of the Hazelwood power station,” federal Energy Minister Frydenberg said today.

“We are working through COAG to ensure the lights stay on and that power prices remain low.

“This task, however, is being made more difficult by states putting in place unrealistic renewable energy targets which will inevitably put energy security at risk and drive up power prices.”

Finkel will update ministers on his review of the blackout.

– with AAP

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