Latest Buzz...


Monday, August 29, 2011

The Great Carbon Tax Distraction


Electricity Prices Going Through the Roof!
But Why?

Carbon Tax Red Herring
The Anthropogenic Global Warming/Carbon Tax “debate” may be the biggest RED HERRING ever perpetrated on the Australian public.
RED HERRING: a deliberate attempt to divert attention

An ardent critic of the Carbon Tax wrote:
People don't want a tax whose only purpose is to artificially make energy expensive to ordinary people and thus lower their standard of living!”, and
I have seen the 'Anthropogenic Global Warming' (AGW) charade become the most regressive political issue in my lifetime. Its purpose is to impose carbon taxes on everything to reduce energy demand. In plain language, a deliberate plan to reduce the standard of living of ordinary working people and the poor.”
This critic may be describing a real problem but has identified the wrong bogeyman...
Rod Sims, head of the Independent Pricing & Regulatory Tribunal of NSW (IPART) – the regulator that sets electricity prices for “ordinary working people and the poor” - writes:
Electricity prices have risen by around 30% in the last 4 years in Australia in real terms; this is a 30% increase on top of inflation.
The recent electricity price increases have mainly been driven by increases in network costs. For example, in NSW from 2007-8 to 2012-13 around two thirds of the electricity price increases are driven by rising network costs. Distribution spending has trebled from about $1 billion per year to about $3 billion per year.”

Residential Electricity Prices Increases
State Electricity Prices – Inflation Adjusted
Rod Sims, ‘Energy market outlook’ (Presentation to the Multi-Party Climate Change Committee, 10 November 2010)
These prices appear to reflect those paid by households and small-to-medium business customers.
A serious question to ask that needs to be addressed here is:
Electricity demand by “ordinary working people and the poor” has fallen 2% per year for the last 4 years.
Why are they paying $3 billion per year for a bigger distribution network?

Update, 1 June 2012

Spending for a bigger distribution network trebled from $1 billion per year to $3 billion per year - according to the above report by Rod Sims of 10 November 2010.

The Australian Decentralised Energy Roadmap launched on 15 December 2011 reports distribution network expenditure as $45 billion for the 5 years 2010-2015. This is $9 billion per year. ($9 billion per year is the total for all Australian States. The figure of $3 billion per year that Rod Sims reports is most likely the expenditure for New South Wales (NSW) only.)

 The question above should read - "Why are they paying $9 billion per year for a bigger distribution network?"

Another serious question to ask is who is responsible for creating the following situation:
40% of businesses that took part in an industry survey in December 2010 reported a DECREASE in electricity prices relative to the CPI over the last 5 years.
Larger companies were more likely to experience no electricity price increases or reductions in electricity prices.
More than 60% of businesses reported NO IMPROVEMENT in energy efficiency over the last 5 years.

Energy Efficiency Improvements of Australian Businesses
Company energy efficiency improvements over the last 5 years
(Source: “Energy shock: confronting higher prices”, Australian Industry Group, February 2011)
The Australian Industry Group report might be retitled:
“Energy Nirvana: living with falling prices”
NIRVANA: a place or state of oblivion to care, pain or external reality.
Have ALL Australians been taken for a ride???
The “No Carbon Tax” movement is attacking what is little more than a "stuffed toy" that has been thrown to keep them occupied.
Pricing regulators have been slugging households with sky-rocketing electricity prices for 4 years and will continue doing this, with or without a carbon tax. Households are being compelled to pay for the generation and delivery of cut-priced electricity to large businesses who happily use it without any thought to increasing efficiency and reducing carbon dioxide emissions.
While the “No Carbon Tax” movement is devoting all its energy and efforts to stopping a carbon tax, it is being diverted from demanding an inquiry into the fixed-price electricity supply contracts that distort the electricity market and provide no incentive for large businesses to increase energy efficiency.


John Quiggin said...

You're correct that increases associated with failed deregulation are much bigger than likely impact of carbon price, but not that it's a deliberate distraction. After all, how would Oz State governments manage to organise a world-wide scare?