The true story behind the Rising Energy Costs In Australia

Rhys Clay

The Queensland Competition Authority (QCA) has released its Final Price Determination for 2012-13 regulated retail electricity prices for all regulated retail electricity tariffs in Queensland. Unsurprisingly for energy consumers prices are set to increase by over 20%, with fixed costs set to increase substantially and punish those who are energy efficient.  According to the QCA, there were a number of factors involved including massive capital expenditure and Government subsidised 'Clean Schemes'.

George Maltabarow, Managing Director of Ausgrid, one of the largest electricity networks in Australia, recently told ABC’s Insight, that one of the main reasons prices are rising is because consumers are pursuing energy intensive lifestyles, which means electricity networks have to spend large amounts on infrastructure to meet rising demand. Energy hungry devices such as air-conditioning units are now being seen as a necessity rather than a luxury.

Energy companies are quick to point their finger at consumers and renewable energy. With many calling for reductions or an end to the Government’s Renewable Energy Target (RET) of 20% renewable energy by 2020. The position of the energy companies is clear: It's the consumer and green energy to blame. But how true is this statement?

Much of Queensland's energy network was built 50 or more years ago and is now becoming obsolete. As an example, ENERGEX (Owner of a large portion of the electricity network) has had to increase their capital expenditure by over 400% from 2005 to just over $1 billion in the last financial year.

In fact Queensland no longer produces enough baseload electricity to power the state on a warm summer day and is forced to generate extra power at premium prices. At one point this past summer, energy retailers were paying $12,000 per megawatt hour (MWh) to the market as expensive smaller generators were fired up.

Electrical Trades Union organiser Trevor Gauld said: "Every time we go over 33C, demand will exceed (baseload) capacity. At the same time, rooftop solar actually helped to drive down demand by delivering energy just when the grid needs it. As the graph below shows, peak demand during the middle of the day has been reduced significantly as 200,000 solar power systems across the state kick in.

 

 

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