The NSW Energy Minister, Chris Hartcher, and the Queensland Treasurer, Andrew Fraser, have written to the federal government in a last-ditch bid to win amendments to the carbon tax legislation that could prevent power prices soaring higher than forecast.
The states have backed a desperate lobbying campaign by the electricity industry for the government to allow deferred payment when they buy forward-dated pollution permits. This delayed repayment was included under the Rudd government’s emissions trading scheme.
The Energy Supply Association has argued the Gillard government’s plan to force immediate payment means cash-strapped generators will not be able to afford to lock in their carbon price liability by writing forward contracts with retailers and big industrial users and instead power prices will rise as they manage their financial risk.
Modelling for the generators by consultants ACIL Tasman has estimated that even a 5 per cent decrease in forward contracting could increase household power bills by 10 per cent, on top of the price rises already expected because of the carbon tax.
Earlier this week Mr Hartcher took up their concerns in a letter to the Climate Change Minister, Greg Combet, expressing ”great concern” at the estimated additional power price rises.
”Households and businesses are already facing substantial cost of living pressures, including from rising electricity and gas prices,” he said.
”I believe these further price rises are easily avoidable. I therefore urge you to support any actions which can minimise the burden on households and businesses.
”This should include implementing pragmatic arrangements such as deferred payment for future carbon permits.”
The Herald has learned Mr Fraser also wrote to Mr Combet in September in similar terms.
Time is running out to get amendments to the bills, which are set to pass the Senate next Tuesday. The Coalition argues they are so flawed they must be opposed outright and according to the generators, the government is ignoring its arguments because it is primarily concerned with getting the early revenue to help its budget bottom line.
”Labor is not listening, they are concerned about their budget bottom line rather than about the budgets of energy customers,” the chief executive of the Energy Supply Association, Clare Savage, said. Labor is proposing to auction 15 million forward-dated permits in 2012-13.
A spokesman for Mr Combet pointed out the government was offering generators $5.5 billion in assistance to smooth the transition to a carbon price as well as loans to help them afford permit purchases.
New modelling released yesterday by the Master Builders Association found building and construction costs would increase by between 1.4 per cent and 2 per cent by 2020 due to price increases in key emission-intensive inputs like steel, aluminium, cement and glass. The MBA said that would increase the cost of a new home by $5000.
