The states face new demands to overhaul their schemes to encourage households to install rooftop solar panels after the NSW government decided to pay for its Solar Bonus Scheme to curb soaring power bills.
Facing an election next month, the government announced it would siphon funds from its NSW Climate Change Fund to pay for the scheme.
The government also confirmed that the second stage of its electricity privatisation had been abandoned as no bids were received.
The move is designed to head off price rises related to the scheme of 5-10 per cent from July 1, although NSW consumers still face a 10-13 per cent slug in their power bills to bankroll multi-billion-dollar upgrades to transmission and distribution networks in the state.
Energy Supply Association of Australia chief executive Brad Page said that all states should move to change their schemes so they were funded on their budgets or via a levy rather than by distorting electricity prices.
Critics say the schemes are inequitable because households that install the rooftop photovoltaic panels are cross-subsidised through higher energy costs.
Under the schemes, households are paid a so-called feed-in tariff, which is a premium rate for producing solar power.
Mr Page pointed to the deal by the Council of Australian Governments on November 29, 2008, that feed-in tariffs should be funded publicly or through a specific levy rather than through cross-subsidies.
“What the Keneally government has announced today is simply compliance with a COAG decision of more than two years ago,” Mr Page said.
Nationwide, the states have rushed to introduce solar feed-in tariff schemes.
A surge in installations had already prompted the NSW government to wind back the scheme in October by slashing the tariff from 60c to 20c per kilowatt hour.
But the NSW opposition decried the move.
Opposition Leader Barry O’Farrell argued that because the Climate Change Fund was paid by a levy on water and electricity suppliers, the move was simply a new tax.
On the privatisation, Premier Kristina Keneally accused the opposition of scaring off potential investors.
She revealed that cabinet had decided it would not pursue any further privatisation.
