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Making electricity more expensive to, er, make electricity more expensive

By johnboy - 1 July 2009 17

The Canberra Times reports on concerns by the ACT Independent Competition and Regulatory Commission that the feed-in tariff system (whereby you get paid for electricity your home generates in surplus to what it consumes) could come at a hefty price:

    Consumers will be forced to pay ”premium prices” to recover the program’s costs including $48million in additional electricity distribution charges years after it has been overtaken by more efficient, nationally consistent energy schemes.

    The ACT Independent Competition and Regulatory Commission has warned the tariff could push up the cost of other public utility services, such as water and waste water services, forcing businesses to move across the border to Queanbeyan, where costs are less.

Well who’da thunk it?

UPDATE: The Greens’ Shane Rattenbury is defending the tariff:

    “But it’s not the ICRC’s job to put a price on benefits to the community, and the feed-in tariff in particular will deliver more than just emissions reductions, it will also help grow local jobs in an industry of the future, and the beginnings of a decentralised energy system.”

    “Stage 2 of the feed-in tariff will see large scale installation on the rooves of warehouses and shopping centres, and the cost to Canberrans will only be around an extra 65 cents a week.”

    “Tackling climate change will cost money in the short term, but not taking action will be far more costly – and early action to insulate ourselves from rising electricity prices will pay off in the longer term.”

    “The Greens are calling on the Government to ensure that low income families are protected from the price rises by lifting the energy concession rate, which has been dropping in real terms over the past 5 years.” said Mr Rattenbury.

What’s Your opinion?


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17 Responses to
Making electricity more expensive to, er, make electricity more expensive
Fisho 5:31 pm 01 Jul 09

How about a voluntary opt-in scheme whereby home producers can waive any fee that they would have received from the power people for extra power that they supply to the grid?

YapYapYap 2:19 pm 01 Jul 09

cont: Final Decision

YapYapYap 2:11 pm 01 Jul 09

housebound said :

So how could the ICRC get it so wrong?

I don’t know what the Commission did or didn’t say to the CT, but it said this the media release that accompanied the decision:

‘The price increase approved by the Commission compares favourably to recent increases in NSW where prices were increased by 18%, 21% and 22% for the three major retailers,’ Mr Baxter said.

Mind you the Commission does note in its Final Decision, that price increases were lower in NSW over the last few years

See the full release at: http://www.icrc.act.gov.au/__data/assets/pdf_file/0006/152637/MediaRelease090605_-_TFT_final_decision.pdf

The Final Decision does contain a few interesting observations and recommendations the CT appears have overlooked (at least in the online article). The Commission has recommended linking increased prices to increases in concessions, noting that since 2004/5 the value of the concession on a typical household has fallen from 19% to to 14.7%.

The Commission also favours getting rid of price fixing all togeather, and allowing the market to set the price. However, the Commission also observes that consumers haven’t to date moved to lower cost retailers, noting: “If all customers switched immediately to the lowest price, then whichever business offered the lowest price would get the entire market. This is the assumption made in models of contestable markets popularised in the 1980s. This is a common assumption for competitive markets, but the evidence observed in the retail electricity market does not support this assumption. We do not observe mass switching to the lowest price competitor in the ACT or any other jurisdiction in Australia where retail competition is permitted. Clearly, switching of electricity retailers by customers occurs more slowly than predicted under the contestable markets assumption.”

This final point seems at odds with the notion that business will drift across the border in pursuit of lower prices (if such a thing really exists) if they can’t be bothered switching to a lower cost provider in the ACT.

I can’t see anything akin to the CT quote, in that release or in the

The cat did it 2:11 pm 01 Jul 09

From the look of things, the ICRC haven’t got it wrong. The solar feed-in tariff is a MASSIVE subsidy for domestic photo-voltaic installations- way above the cost of actual power production, IIRC. But governments feel they have to be seen to be taking action, and there are a lot of ‘enthusiasts’, industry shills etc making a lot of noise at the moment. Yes, Germany has a generous fed-in tariff, but it’s linked to the development of a large domestic PV industry- the ACT’s initiative isn’t; it’s just wildly generous, as the ICRC has noted. Even with an over-generous feed-in tariff and installation rebates, PV is still expensive compared to conventional generation.

Under present pricing arrangements, the only saving from PV is the saving on fuel inputs to conventional thermal generators. Any saving on capital would be negligible given the current size of PV units. Things will stay like this as long as the general population thinks it has a right to use as much electricity as it wants, whenever it wants to.

Unfortunately, there’s a lot of enthusiastic but uninformed talk about PV, and particularly about the use of PV in a conventional electricity grid.

caf 1:24 pm 01 Jul 09

ACTEW itself has nothing to do with electricity these days (despite still having the ‘E’ in its name), other than as a part-owner of ActewAGL.

AG Canberra 1:08 pm 01 Jul 09

Ok – can anyone clarify this –

Is the ACT Gov paying ACTEW to pay individuals for their solar power?

OR

Is ACTEW expected to cover the cost (and therefore will pass it onto all consumers) – like the abstraction charge for water that we had…

housebound 12:26 pm 01 Jul 09

So how could the ICRC get it so wrong?

YapYapYap 11:42 am 01 Jul 09

Which cocts are less across the border? Certainly not electricity, which has just gone up 20%.

http://www.news.com.au/dailytelegraph/money/story/0,26860,25709109-5015795,00.html

S4anta 11:41 am 01 Jul 09

Wouldn’t the savings from not relying on other methods of electricity production offset these costs?

I mean if a large proportion (there is the kicker) of homes etc in the ACT produced a surplus to feed back into the grid wouldn’t this mean that the need to create electricity by the powers that be will be less? The major over head of infrstructure will still apply one has to assume.

Or have I f**ked this up?

Ian 11:33 am 01 Jul 09

Not to mention “being seen to be doing something”

Ian 11:33 am 01 Jul 09

Governments do these things because you just can’t put a price on “smug” and “warm and fuzzy”.

ant 11:01 am 01 Jul 09

pug206gti said :

Domestic electricity is hardly cheaper in Quangers!

When I lived there in 2007-2008 it was about 18c/kwh. This is significantly more than the domestic rate in Canberra, which on last bill was about 11c/kwh from memory.

And it’s even more if you’re deemed to be “rural”. Country Energy keep sending slightly incoherent letters about rates skyrocketing so I’m awaiting my next bill with trepidation. They really hit you for your “having electricity” fee too, before you even begin using any. My “supply” fee is usually greater than my usage fee.

Morgan 10:51 am 01 Jul 09

Why we subsidise people to put solar panels on their roof, when Solar Farms are so much more efficient is beyond me.

Peewee Slasher 10:48 am 01 Jul 09

“Consumers will be forced to pay ”premium prices” to recover the program’s costs including $48million in additional electricity distribution charges years after it has been overtaken by more efficient, nationally consistent energy schemes”.

To discuss this item, a clearer picture is required in regard to “more efficient, nationally consistent energy schemes”.

Nationally consistent schemes are admirable and achievable, but what are the more efficient schemes that the ICRC refer to?

pug206gti 10:38 am 01 Jul 09

Domestic electricity is hardly cheaper in Quangers!

When I lived there in 2007-2008 it was about 18c/kwh. This is significantly more than the domestic rate in Canberra, which on last bill was about 11c/kwh from memory.

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