Cost of Electricity Still Higher than Needed Following Review

Businesses and households will continue to pay more than they should for their electricity following the Climate Change Authority’s review of the Renewable Energy Target (RET) scheme.

Business Council of Australia Chief Executive Jennifer Westacott said the failure of the authority to recommend adjusting the RET scheme so it delivers on its intended contribution of 20 per cent of Australia’s energy by 2020 will impose additional, unnecessary costs on the economy.

“As the Business Council and others have said, falling energy demand has meant the 41,000 Gwh of energy required to be supplied through the RET scheme will result in the scheme effectively contributing over 25 per cent of Australia’s energy on current trends by 2020,” Ms Westacott said.

“Adjusting the RET to reflect a true 20 per cent contribution to Australia’s energy supplies is not about reducing the capacity to meet the national 2020 greenhouse gas emissions target, it’s about reducing the costs on the economy while meeting the intended target,” she said.

“Households do not want to be paying any more than they have to for electricity and business can ill afford to absorb unnecessary added costs at a time when many of them are under extreme competitiveness pressures.

“We acknowledge that electricity price rises are driven by a range of factors including capital investment, but at a time when households and businesses are under serious cost pressures we should not be pursuing policies which add unnecessarily to electricity costs.

“We welcome the acknowledgement by the Climate Change Authority of the disproportionate costs associated with the Small Scale Renewable Energy Scheme. This is a start but it doesn’t deal with the broader issue of the RET scheme not reflecting a true 20 per cent contribution.

“While the BCA has for some time argued the RET is not necessary, it has been in place for several years and substantial investments have been made, making it very difficult to address the adverse consequences of winding up the policy earlier than 2030.

“What remains important is the RET should not be extended beyond 2030,” she said.