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Greens move on energy poverty

By johnboy 4 February 2011 27

In a suprising move the Greens’ Shane Rattenbury is banging the drum on “energy poverty”:

New figures obtained by the Greens reveal that between 2004 and 2010, while the average household electricity and gas costs increased from $993 to $1506, the Energy Concession Rebate for low income households increased by a measly $5.86.

Greens Spokesperson for Energy, Shane Rattenbury, says the ACT Government has failed to support those most vulnerable to energy price increases in the ACT community.

“The Government has failed struggling households by not increasing the energy Concession Rebate to a level that mirrors energy prices rises,” said Mr. Rattenbury.

In response to a Question on Notice, Minister Joy Burch provided figures showing that between 2004 and 2010, average household electricity and gas costs skyrocketed from $993 to $1506, but the Energy Concession Rebate increased by just $5.86.

“That a massive 50% increase in bills, but the government increased the support payment by only 3% over the same period.

Isn’t price signalling to reduce consumption rather a key part of Green policy?


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Greens move on energy poverty
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monomania 4:02 pm 07 Feb 11

Gungahlin Al said :

A pretty rational and unoffensive debate this one. Would that it were always so…

There is one very simple reality here – PV on your roof generates the greatest energy rate at precisely when it is most needed, and if not for the rapid roll-out of domestic PV thanks to the FIT, we would need a lot more work done to the grid and new generation capacity (= new gas-powered generator plant) – and that would cost a lot more.

The only reason the FIT currently costs little is because little solar electricity is currently being produced. It will be a different matter when 30MW of micro and mini solar generators on roofs and 30MW rising to 210MW of solar farms have to be paid for.

It might be different in Brisbane but Canberra’s peak electricity use in winter is as great as that of summer and occurs when little or no solar electricity is being produced.

This is just one of the irrational reasons proponents of solar electricity use to justify why others should pay through a FIT for their uneconomic micro-generators.

JustThinking 5:42 pm 04 Feb 11

wildturkeycanoe said :

The reason our energy bills have skyrocketed is due to the fact apart from price rises is that older styles of heating have been pretty much outlawed. Back in the 70’s we had wood fires to heat our houses. They worked, were cheap to run and also gave us something to watch apart from the TV. We had a wood fire whilst living in N.S.W over a year ago and a trailer load of redgum got the house “toasty” for about $100/month. In our 5 star brand new house in the suburbs here, it cost $30 supply charge and $5/day totalling $180 for a gas wall furnace. That wasn’t even turned on for more than 8 hours a day and didn’t warm half the house. Those “environmentally friendly” forms of heating such as natural gas, slab and space heating and reverse cycle are much more expensive so it doesn’t take a genius to see why were all suffering huge $1000-$2000 per quarter electricity bills. But don’t worry – we’re saving the planet!!!

Agree..
When I moved back here I got the gas heating connected. No more chopping wood how wonderful..BUT the charges were amazing. $348 first bill THEN $460 second bill….I even got a bill directed to “house owner” years after the gas was dissconnected!??!!!!!!
Our gas heater is in the loungeroom of a long house,,,,,so it only heats the loungeroom and part of the kitchen. Bedrooms were always freezing.
So I cut the gas and bought 2 electricity run heaters,,,,,one for the loungeroom and one for hallway near bedrooms. All rooms are comfortable at less than 1/2 the cost of gas.

wildturkeycanoe 5:23 pm 04 Feb 11

The reason our energy bills have skyrocketed is due to the fact apart from price rises is that older styles of heating have been pretty much outlawed. Back in the 70’s we had wood fires to heat our houses. They worked, were cheap to run and also gave us something to watch apart from the TV. We had a wood fire whilst living in N.S.W over a year ago and a trailer load of redgum got the house “toasty” for about $100/month. In our 5 star brand new house in the suburbs here, it cost $30 supply charge and $5/day totalling $180 for a gas wall furnace. That wasn’t even turned on for more than 8 hours a day and didn’t warm half the house. Those “environmentally friendly” forms of heating such as natural gas, slab and space heating and reverse cycle are much more expensive so it doesn’t take a genius to see why were all suffering huge $1000-$2000 per quarter electricity bills. But don’t worry – we’re saving the planet!!!

GottaLoveCanberra 5:06 pm 04 Feb 11

johnboy said :

I’ve had it pointed out to me that the Greens’ policy paper is quite clear on this:

8. reviewing ActewAGL tariff structures to provide a clear price incentive to reduce energy use

I’m not sure how much clearer it can get?

http://www.actewagl.com.au/prices/home/ACT/elec.aspx

merlin bodega 2:57 pm 04 Feb 11

Price signals work very well in a world where people are infinitely flexible to change their consumption habits. The poorer people have little flexibility to change their choices in the short term and many choices like installing PV’s are for all practical purposes out of reach; more so since they are less likely to be home owners. Expecting them to respond to price signals in the same way as a more well off person is unfair. The Greens have ironically allowed the poor to participate in the ACT’s high buy in rate for micro generated electricity by pushing up their energy bills by an estimated $100 per year. That the Labor Party presided over this is a disgrace.

Pommy bastard 2:49 pm 04 Feb 11

Well, the greenies should get “the poor” to work on environmental projects, such as planting trees, and collecting tin cans for recycling, to offset the carbon production of their increased energy usage, which we will pay for out of our taxes. They could transport them about in lentil powered eco SUV’s, and have facilitators to enable group cohesion, and vegetarian…Arrrghh…bloody Greenies…bloody, bloody greeny green ideas aaargh.. kill me now….

johnboy 2:36 pm 04 Feb 11

Didn’t survive

georgesgenitals 2:35 pm 04 Feb 11

johnboy said :

housebound said :

Makes you wonder though, how did we all survive without electricity in the not-too-distant past?

Well, a lot of people didn’t.

Didn’t survive? Or didn’t have electricity?

johnboy 1:49 pm 04 Feb 11

housebound said :

Makes you wonder though, how did we all survive without electricity in the not-too-distant past?

Well, a lot of people didn’t.

housebound 1:46 pm 04 Feb 11

Greens policies quoted so far are all fairly broad – dare I say it: motherhood statements all:
7. the cost of reducing energy use and greenhouse emissions should be equitably distributed across the ACT community and Australia, and internationally
8. reviewing ActewAGL tariff structures to provide a clear price incentive to reduce energy use
9. a “polluter-pays” strategy to encourage greenhouse gas reduction with appropriate assistance for those in need

The issue is that they have never been asked for costing before (unlike the pressure applied to other political parties), so they have never had to sit down and owrk through what the cost impacts on households will be, what the subsidies on low-income hoseholds will be needed (if any), and how they would pay for them. This is exactly what would be demanded from the Libs and ALP.

It seems that only now has the reality of cost impacts hit the Greens, along with the potential electoral impacts. The question is whether they can move from an ideological movement (that is content to stay in motherhood statements of ‘shouls’ and other ideals), or whether they can develop actual costed policies.

As for the debate about demand being relatively inelastic at the extreme ends, it is pretty well established that the poor can use only so little (unless they are homeless or use candles), and the rich can afford to use as much as they want. Don’t ask for references, it’s all too long ago now.

Makes you wonder though, how did we all survive without electricity in the not-too-distant past?

chewy14 1:44 pm 04 Feb 11

What?
You mean the Greens have poorly constructed policy that conflicts with other poorly constructed Greens policy?
Well I never.

Erg0 1:04 pm 04 Feb 11

Felix said :

I’m afraid that believing there is a direct relationship between pricing and usage is naive – real world experience indicates that the relatiomnship is uneven and imperfect and there is a raft of other factors that impact elasticity. So it just isn’t ‘simple as that’.

You’d better let the Greens know that, you’ve just revealed that carbon pricing is useless.

Either that or my statement was intended to be taken in context of the debate about pricing as an isolated factor, and you’re just being pedantic.

johnboy 12:59 pm 04 Feb 11

I’ve had it pointed out to me that the Greens’ policy paper is quite clear on this:

8. reviewing ActewAGL tariff structures to provide a clear price incentive to reduce energy use

georgesgenitals 12:54 pm 04 Feb 11

Skidbladnir said :

All you’ll achieve is an increase to that segment’s purchasing power somewhat and gradually increase market demand without increasing overall supply.

Start paying a subsidy, then to sustain the effectiveess of the subsidy you’re forced to start increasing that subsidy due to the fact you altered the market equilibrium by introduced the subsidy (without atcually encouraging efficient consumption), and getting rid of it becomes less of an option.

In reading this, I am reminded of how the First Home Owners Grant impacted property prices.

PM 12:52 pm 04 Feb 11

Felix said :

Surely the ‘way around it’ is to offer some degree of subsidy to the poor, as Rattendbury is suggesting. I believe this has been discussed in many places – for that matter, I think even Ross Garnaut has suggested that you should use some of the money collected from a carbon tax and/or CPRS-style-scheme to provide some level of relief for lower income people.

In short, I don’t think it’s a cake at all – rather an area that requires some common sense economics applied to it.

Great. Felix is anti-cake now.

May I ask what the dollar value of the Energy Concession Rebate is? It’s all well and good to claim it was only raised by 3%, but what is the total percentage of the rebate worth to the average energy bill?

Gungahlin Al 12:50 pm 04 Feb 11

A pretty rational and unoffensive debate this one. Would that it were always so…

A key aspect missing from the debate is that the rapid increases are not entirely the result of the feed-in tariff. In fact the majority of the increase is instead due to the incredible amount of work that has to be done to upgrade the network infrastructure to cope with the peak demand being shifted from around dinner time to the middle of the day in warmer months. This is almost entirely down to availability of cheaper air conditioning systems. It may be that most of them only get such serious use on weekends, but the network has to be built to cope with the peaks, regardless of their frequency.

When I worked for the air and energy team in Brisbane City Council in 2002, the authorities were just becoming seriously concerned about how fragile the grid was when it came to coping with rapidly escalating summer peak loads. It was even starting to fall over.

It is most unfortunate that the FIT is coming into strength at the same time as this vital network upgrade, because it is very easy as a result for the entire cost increase to be blamed on the FIT.

There is one very simple reality here – PV on your roof generates the greatest energy rate at precisely when it is most needed, and if not for the rapid roll-out of domestic PV thanks to the FIT, we would need a lot more work done to the grid and new generation capacity (= new gas-powered generator plant) – and that would cost a lot more.

Regrettably, our semi-corporatised energy provider ACTEW-AGL has an interest in generating more and more energy and selling it, and bugger the greenhouse impact, so they are never going to give you a clear explanation on this. They are more than happy to let the FIT take the hit.

Back OT, the energy consumption of the poorest households is largely inelastic, as said in #5, and the subsidy is about recognising and compensating somewhat for the increase for those most affected. As Felix said in #3, the entire approach proposed for a carbon tax is premised on making sure those least able to cope with such rapid shifts are helped through a transition period, while sheeting the costs home to the polluters who’ve been getting off scot free for so long.

Where the ALP came undone with the CPRS proposal was that they were convinced by those same polluters to promise absurd subsidies to them too. That’s why a carbon tax will be a whole lot easier to ‘sell’ because it will be a whole lot harder to conceal such industry subsidies in a much simpler system – even journalists will be able to understand it.

JustThinking 12:34 pm 04 Feb 11

No matter what ‘subsidy’ there is for anything you will always have those people who are thankful and use it wisely and those others who think ‘goody free stuff’ and take advantage of it.
How many people battle to pay electricity bills or go on plans while those who don’t give a ratz just go to Vinneys or Salvo’s and have it paid for them?
Admittedly you are only supposed to be able to have that done twice a year but those who do it regulary have it worked out so they never pay (or hardly ever) so do you think they care how much they use?

Subsidies and rebates need some hard work put in to them so they are benefitting the people who NEED them, not the people taking advantage of them.

Skidbladnir 12:18 pm 04 Feb 11

Long term subsidies on a rival good (such as electricty) for a consumer segment really won’t help, unless they use that subsidy to buy more efficient appliances.
Does anyone really expect your Centrelink recipient to buy efficient when they can just buy more conspicuous consumption (ie: plasma tvs)?

All you’ll achieve is an increase to that segment’s purchasing power somewhat and gradually increase market demand without increasing overall supply.

Start paying a subsidy, then to sustain the effectiveess of the subsidy you’re forced to start increasing that subsidy due to the fact you altered the market equilibrium by introduced the subsidy (without atcually encouraging efficient consumption), and getting rid of it becomes less of an option.

Felix 12:18 pm 04 Feb 11

I’m afraid that believing there is a direct relationship between pricing and usage is naive – real world experience indicates that the relatiomnship is uneven and imperfect and there is a raft of other factors that impact elasticity. So it just isn’t ‘simple as that’.

As to housbound’s observation about Greens policies, it’s worth a tiny bit of reasearch on this subject by checking the policies on their website. For example, the following principles are listed there under ‘Climate Change and Energy’:
7. the cost of reducing energy use and greenhouse emissions should be equitably distributed across the ACT community and Australia, and internationally
9. a “polluter-pays” strategy to encourage greenhouse gas reduction with appropriate assistance for those in need
Fairly broad, I’ll grant you, but these principles seem to me to address exactly the questions you raise.

p1 12:14 pm 04 Feb 11

Further complicating this is that poor people are likely to have older, smaller, less efficient heaters, in less well insulated homes. Thus using more power (if they can afford it).

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