Who gets the blame for energy poverty in Australia?

wind turbine

87% of electricity price rises are nothing to do with renewables. But we still get the blame. Funny that.

Energy poverty in Australia is defined as when more than 10 percent of your household disposable income is spent on energy. It’s a newish problem in our country but one, due to rapidly escalating electricity prices, that we will unfortunately hear a great deal more about in coming years. With the skyrocketing electricity prices that have kicked in around the country, the question (from the point of view of the big energy companies and their politician friends) is not so much “Have we got a massive problem with energy poverty in this country?” as “Who the [email protected]# can we blame?”

Cue solar energy and other renewable forms of power (of course). Read the Murdoch press (and listen to their accomplices in the federal and state capitals) and you get the same rant. The reason for our burgeoning electricity prices, say the solar narks, seat polishers etc is entirely due to programs such as the Renewable Energy Target (RET) and the carbon tax.

The assumption is that, without these subsidies to renewable energy, electricity prices would fall to their previous level.

Nothing could be further from the truth as was highlighted in the ABC’s excellent Background Briefing program (“The Price of Power”). Indeed as Richard Denniss, executive director of The Australia Institute states clearly, the bulk of the electricity price rise is the fault of the energy companies.

“For all of the attention that carbon price has got, from the increasing attention the renewable energy target’s got, the main reason that electricity has been getting dearer is the overinvestment in poles and wires, and the fundamental inefficiency in the way that the national electricity market’s working,” says Denniss.

This investment — justified by the power companies due to an incorrect belief that demand will increase — has of course been subsidised by the consumer in the form of higher prices. Let’s look at the figures.

According to the Australian Energy Markets Commission, the programs associated with the renewable energy target amount to 4 percent of the electricity price rise. Around a dollar a week. Added to that are costs associated with the previous carbon tax which amount to a grand total of around 13 percent of the estimated 100 percent rise in electricity prices. The remaining 87 percent can be put down to an overinvestment of $45 billion in network infrastructure.

So having established who’s really to blame for the price hikes, it’s equally important to address the problem this greed is causing. For the problem of energy poverty Australia is becoming very real indeed. According to a 2012 University of Sydney study, energy poverty is striking Australians, particularly those on lower incomes, very hard.

“Energy poverty needs to be explicitly recognised as a distinct and growing social problem for Australia’s 3.5 million households, who fall in the two lowest-income quintiles as defined by the Australian Bureau of Statistics,” said study author Dr Lynne Chester.

“Steep increases in electricity prices will cause hardship for low-income households because they have far less capacity to reduce their energy demand.” Dr Chester added.

Are we on the verge of very real energy poverty Australia due to energy company’s greed? If so what are the options for going off the grid completely? A key point raised on the Background Briefing program was the possibility of more and more Australians leaving the grid due to

(a) increasing price rises triggered (as we have seen) by the energy companies,

(b) the falling costs of solar systems and

(c) expected improvements in the capacity and price of solar battery storage.

Australians are an innovative lot, particularly in more remote communities. How long before complete energy independence becomes the answer to energy companies’ greed and resulting energy poverty Australia? This has become a vital issue for Australians as the government sets up an “independent” review into the RET. We’d like your opinion on the questions raised either here or at our Facebook, Google Plus or Twitter Pages.

Comments

  1. Yes Minister says

    The poles & wires excuse falls somewhere between very creative accounting a blatant iie. Anyone who follows Queensland politics will recall one of the very first acts of the Newman rabble was to sack a sizeable percentage of Energex / Ergon / Powerlink staff, followed shortly after by an edict that none but the most urgent maintenance was to be done. With something like a quarter of previous work being done, how could there possibly have been any gold-plating going on !!!! According to the tame Competition Authority (which incidentally, does its best to stifle competition), maintenance costings are done for lengthy periods & considerable expense was incurred during the time of the Blighters, hence the convenient ‘gold plating’ furphy. Over the past couple of years there has been stuff-all maintenance carried out, let alone over the top work as suggested by the ‘gold plating’ argument. Note that this story was only one of three dreamed up by Newman spin-doctors, the others being the ‘solar people are evil’ one (disproved by official Competition Authority figures) & the even more ridiculous 10% GST caused a 150% or whatever it was price increase. With two out of three proposals shot down in flames, why would anyone ascribe any credibility to the third ??

    The ‘REAL’ reason for electricity price escalation is clearly privatization, although I have no doubt the opportunity for politicians to shirk responsibility also figured.. Companies exist for one reason only, ie profit. whereas essential services are what we have a reasonable expectation of being provided on a non-profit basis by the bloodsucking parasites we elect. Even Teflon Pete as the architect of retail electricity privatization in Queensland has admitted it wasn’t a good move. Corporatization of Energex / Ergon / Powerlink allowed the Beatty government to start siphoning dividends off, money that was previously ploughed back into the utilities. Based on the most recently available figures, something like a billion dollars per annum is diverted to who knows where. Origin, AGL and the rats & mice retailers chew up another four billion per annum between operating profits, fatcat largesse & shareholder dividends. That a total FIVE BILLION per annum surcharge for corporatization / privatization, ….. more than $2000 per electricity connection per annum over and above what we were paying for electricity before this ‘sell everything not bolted down’ nonsense came into vogue.

    • Hear, Hear! Pretty well spot on Minister! When are we as a community going to start insisting on the provision of public services instead of seeing our politician rabble, driven by ideology, turning everything into a profit making business!

    • Interesting comment thanks Yes Minister. Are prices driven by ideology?

      • Yes Minister says

        it may not be quite as simple as ‘prices driven by ideology’ however the inevitable result of contemporary political ideology is massive price escalation. ‘Corporatize to avoid accountability’ ideology resulted in the billion odd worth of dividends being siphoned off Energex, Ergon & Powerlink and diverted to who knows where, and the ‘flog everything to cronies’ ideology costs Queenslanders some four billion per annum. The poles & wires was merely a halfway plausible excuse that unfortunately has been seized on by people who haven’t bothered to check the facts.

  2. As more and more people go off grid burden on rest will increase. This may form positive feedback loop as more people will shift off grid till there will be no one on grid except Government and large industries.

    Just the daily connection charge is $1.50 for Gas and electricity hence unless your monthly bill is more than $100 you land up paying equal amount for consumption and connection.

    You should address the water problem in the same way.

    If all home owners start harvesting rainwater and recycle there own water they will land up solving major problem.

    • Yes Minister says

      I understand the retail electricity death spiral is already recognized as such in Europe. Difference in Australia is that the avaricious parasites we elect are far too stupid to realize the light at the end of the tunnel is the train heading their way. Your suggestion re water is fine except that the powers that be are a few steps ahead in that they implemented a significant connection charge yonks ago, consequently even someone who used no ‘town’ water still pays through the nose for the privilege of having something available that they don’t use. I had exactly that situation in a previous abode … ample tank capacity, onsite bore, no ‘town’ water usage but water mains in the street that meant I still got a substantial water bill. Thankfully my present residence is in a remote area that will never have ‘town’ water. One can only hope the grubs don’t apply the same ‘service is available therefore you pay’ logic to off-grid electricity systems.

      • I have been told personally by someone that works for the government that it is almost inevitable that networks will try to charge you for the grid if it goes past your home – whether you connect to it or not. My guess is that this will come in in about 4-5 years when batteries are half their current price per kWh. That will be an interesting one politically. Kinda like trying to get people to pay for a Telstra landline if the copper goes past their home – even if they only use a mobile.

        • Yes Minister says

          I guess the main difference between water & electricity is that effectively a government service whereas electricity is well on the way toward being a private industry concern and. same goes for the telcos. Whilst I can imagine governments passing legislation to protect their own business interests, doing the same to prop up a private venture would raise ‘interesting’ questions. Mind you one could argue that motor vehicle industry protection schemes are somewhat similar.

  3. I think the power companies missed a trick when they didn’t sell solar,if they had they would have raised money for the infrastructure and wouldn’t be whinging now.

    • Origin is still selling solar panels etc.

      • Yes Minister says

        Actually there is an interesting change to the rules regarding home PV systems about to be unleashed in Queensland with applications for systems over 3kw to be automatically refused unless they are non-exporting. Very few installers are aware of the impending change & according to contacts in Energex, unless they update their qualifications to cover the non-export bit, they won’t be allowed to do 3kw plus installations or maintenance, The upside is that the previous ban on 5kw PV systems will be relaxed PROVIDING the system is non exporting.

        • Yes – the proposal is that they will need reactive power control for all systems larger than 2kW! SMA will clean up as they are the only residential inverter manufacturers I know of in Australia that can currently do this:

          http://www.sma-australia.com.au/en_AU/products/solar-inverters/sunny-boy/sunny-boy-3000tl-4000tl-5000tl-with-reactive-power-control.html

          The downside of reactive power control is that is will reduce energy yields for the home owner (and adds to the inverter cost). Bummer.

          • Yes Minister says

            I gather its possible to use a non-export relay with non-SMA inverters and achieve the same result. For what its worth, there is a list of approved relays available on the Energex website. The draft rules I’ve seen allow for up to 3kw systems in Energex areas & 3.5kw in Ergon areas before a non-export requirement applies but its anyones guess what will be in the final version.

        • So does all this mean that the energy monsters and their government friends going to have the hide to tell PRIVATE CONSUMERS what PV systems they can have? Talk about covering their collective arses and profits.

          • Yes Minister says

            And some people tell me I have a cynical attitude toward bloodsucking parasite politicians and their avaricious big-business cronies.

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