Contributed by Jim Hayes

Power prices have emerged as a key issue in the federal election campaign. Albanese and Dutton both claim they will provide cost relief on this count. The question is how much of it is real and by how much is it no more than sleight of hand electioneering?

The fat that they are even talking about them is a recognition of how important they are, and that Australia is demanding much better than we are getting. Power prices have increased enormously over recent years. Frist it was electricity, then gas moved ono the same trajectory. According to data compiled by economic consultancy HoustonKemp, underlying electricity prices have trebled over the past 20 years, compared to a 66 per cent increase in broader prices in the economy.

Photo from iStock

For years now, the false explanation has been that this all about global prices that Australia has little control over. This is not true. Australia does not depend on imports to generate electricity.

The connection between what we pay for gas and the global price hinges on that fact that Australia exports much of the gas taken from the ground and oceans, and the companies owning the resource sell it for as high a price as they can. Limiting what is supplied to the Australian market is used to bump up the domestic price by creating an artificial shortage, and the existing law defends this. Pegging domestic prices of gas to global ones is a political decision.

Neither Albanese have offered an intention to decouple gas from global prices or to outlaw creating artificial shortages.

Labor has promised to provide 1 million household batteries so that Australians can use less electricity. But there is no promise to lower the price. This is a step back from the last election, where Labor promised to cut bills by $275. The promise was not delivered. Although welcome, mere electricity rebates are nowhere close to addressing excessive electricity prices. The Coalition promised to cut the tax on fuel in half. Being relegated to opposition meant that they didn’t have to deliver on the promise. This time Dutton promised costly nuclear power and is now backtracking on this.

This segways us into the Dutton argument that the nuclear option is the way to propel Australia towards ending carbon emissions. In fact, the Coalition has moved right away from any promise on this. Labor has also downgraded its own carbon reduction policy. There is a de facto consensus on not talking about it during this election campaign.

Moving back to electricity prices. It is said that a major factor in escalating prices is the cost of replacing generating capacity and the poles and cables necessary to transport electricity to the users. The reality is that there is a more or less fixed charge on our bills to cover for this, plus generous government subsidies to the private providers to cover any gap. in addition, it happens that the proportion of what is spent on upgrades and maintenance fell form 50 percent between the 2015-16 and the 2020-21 financial years. This was not reflected in electricity bills. Price rises are due to other factors.

Furthermore, there is clear evidence that the usually, Singapore registered companies have used a large part of the money we pay for upgrading and maintenance has been transferred to their parent companies as extravagant consultant fees. Australian law allows this. It turns out that the taxpayer covers the bill. No one is talking about changing the law to prevent this scam.

Labor provides households with a $75 subsidy every three months, and a 30 percent subsidy on solar batteries to those who can afford them. The Coalition offers nothing more than the nuclear option at a cost of $120 billion. This gives rise to a major hierocracy. For years, the Coalition blamed price hikes on the cost of transferring to renewable energy sources. at least this diversion has gone out the window for now.

The final major excuse to high electricity prices is that Australians are using far too much off peak cost electricity. Maybe households use more at night when they are home. This is not surprising. But there is another story here. This is the existing electricity market and how the national grid fits into this. Electricity generators work to sell as big a proportion as they can during the peak when prices are at their highest. Energy supply companies purchase at off peak prices and sell at peak prices. No one is talking about changing this law, when doing so would deliver s big cut in prices.

Gas pieces could be cut by mandating by law that domestic needs are given priority ahead of exports. This is not hard to do either.

A longer-term solution is to invest a lot more into alternative and now cheaper energy solutions, an wean off dependency on more costly coal and gas.

None of this is being done because the ideological consensus is that the market must not be interfered with.