The NSW pricing regulator IPART has called on Canberra to abandon its renewable energy target now that a price has been put on carbon.
It has also thrown its weight behind the need to reduce electricity reliability standards to stem spiralling power prices.
The Independent Pricing and Regulatory Tribunal also backed the roll-out of so-called smart meters, although not for their introduction to be mandated as in Victoria, where the cost of the introduction has risen fourfold to $2.3 billion.
In a submission to a federal government inquiry into power prices, IPART highlighted the role of high reliability standards in forcing prices higher in NSW. This should be reduced by adopting the methodology used in Victoria, it said.
The main reason for rising prices in NSW has been a doubling in real terms in transmission costs, which now make up $1159 of a typical household’s annual electricity bill.
However, the combined cost of the carbon price, the renewable energy scheme, the climate change fund and the energy savings scheme adds a further $316 to the bill.
Of this, the carbon price accounts for about 9 per cent, or $167, of a bill, with the other “green” schemes adding a further $149 a year.
“We are concerned that these green schemes may be adding unnecessary costs to energy bills now there is a carbon price, and may be creating investment-distorting complexities in energy markets,” IPART noted in its call for the renewable energy target to be axed.
By 2020, for example, the cost of the scheme might exceed the carbon price, it said.
“Given that the [renewable energy target] is not complementary with a carbon pricing mechanism, we recommend that the Commonwealth government close the [renewable energy target].”
Along with declining productivity in the power sector, IPART pointed to a poor regulatory framework for putting upward pressure on prices. New investment should be limited to “efficient” items only, it said.
As well, IPART called for the use of more time-of-use, or smart, meters, which allow electricity companies to charge more varied tariffs, such as boosting charges at peak demand times and cutting tariffs at off-peak times. This encourages a reduction in peak-time use, helping to curb unnecessary investment.
Environmental groups voiced concern about the stance taken by IPART, which comes as private sector companies have this week begun pushing for a ‘‘flexible’’ 20 per cent target for renewable energy to be introduced, following recent weakness in underlying electricity demand.
‘‘IPART has lost touch with the future,’’ Jeff Angel of the Total Environment Centre said. ‘‘It’s stuck in a narrow economic ideology which doesn’t take account of the real world of … the ongoing inefficient government subsidies for fossil power.
‘‘It appears to be echoing the conservative views of the NSW energy minister [Mr chris Hartcher], even though the recently released Renewable Energy Strategy has set a 20 per cent target.
‘‘Is IPART on a ‘search and destroy’ mission for policies that will make a real difference to the green energy future of NSW and of Australia?’’
The Clean Energy Council also warned against any changes to the renewables energy scheme.
“Australia’s Renewable Energy Target has generated some $18.5 billion of investment and thousands of jobs, and to date has been the single largest carbon abatement scheme in Australia,” the council’s policy director, Mr Russell Marsh said.
“Any changes to the Renewable Energy Target would shatter Australia’s policy stability and remove investor confidence in clean energy, negating the industry’s ability to support Australia’s shift to clean energy sources and to reduce energy costs for consumers in the long-term.”
