Contributed by Jim Hayes
Australians are about to pay a whole lot more for using electricity. All parties promised to put a stop to all these price rises during the last federal election campaign. The promise has been betrayed.
The Australian Energy Regulator (AER) who is supposed to keep a lid on he rises has just lifted what can be charged by electricity companies, and they have been allowed to set tiers to charge different plans with different prices in some areas. The argument given is that this will generate competition.
Expected price rises are from around 20 percent to more than 30 percent. This will add considerable financial stress to many already pressed households.
The problem with the existing price regulation system is that it relies on the belief that the market is the way to generate the best outcome. If this outcome is to deliver lower prices, it has been a total failure.
To be fair, it must be acknowledged that the Albanese government did set a price cap in October last year. This had a small and temporary positive effect. There was a little fall in prices. Unfortunately. this might be coming to an end. A bigger and longer-term solution is needed.
Images by LAVO: Ending coal power plants and shifting to renewable alternatives is part of the answer
If lower energy cost is still the objective, there must be a different approach. It is not necessary to peg to international prices, as is the case at the moment. Instead of generous subsidies to energy companies, there should be sufficient investment into cheaper and cleaner energy. Australia remains reliant on aging coal generation plants that are no longer working efficiently, and therefore raising costs. The sensible thing would be to close these down as soon as possible.
Decoupling from global prices and cheaper production would do a great deal to lower the cost faced by households and businesses. The added bonus would be to lower Australia’s carbon footprint.
Capacity to produce storage batteries on a quality and scale that will allow the storage of aa huge amount of energy exists. Combining this with the use of solar, wind, and other renewable forms of energy production, if on sufficient scale, would mean a massive increase in supply and much lower bills.
The market mechanism will do none of this. It requires government legislation and action. Holding it back is not incapacity but an ideological refusal to allow any approach that does not maintain the status quo.
It can’t go on this way. Energy costs are a significant contributor to the rising cost of living and rising poverty in Australia. They impose serious costs on businesses. Everyone loses but the owners of energy companies. This is unfair.