Power price rises to hit the cost of all goods and services

We’ll be paying an extra $10 to $12 billion for our energy this year. That’s $400 to $500 for ever man woman and child in Australia.

According to the below article, published recently in The Australian, about $3 billion will hit our household energy bills and the other $9 billion will hit families indirectly, as businesses pass on their higher energy costs through prices rises on goods and services.

Rio Tinto chief executive Jean-Sebastien Jacques last night warned Australia had gained a reputation for being one of the most expensive jurisdictions to do business and predicted the future of many operations — “mining, manufacturing, agriculture and businesses large and small — are at risk’’.

Mr Jacques told a Minerals Council function that, in a decade, Australia had gone from having some of the most competitively priced energy in the developed world “to having nearly the most expensive’’.

The state of Australia’s power system and energy policy is a hot topic, featuring stories daily across the various media outlets.

It’s understandable. Energy policy has resulted in the closure of power stations in SA and Victoria, removing affordable, reliable baseload from the grid, while increasing intermittent wind and solar.

Australian electricity prices have gone from being affordable, to being some of the most expensive in the world.

Electricity generators appear to be gaming the system to invoke higher prices while receiving billions in subsidies for wind and solar.

There’s a lot of confusion and misinformation. Data is hard to come by. Extreme green advocates are claiming wind and solar are now cheaper than coal, ignoring the fact that current policies will hand over $3 billion in taxpayer dollars via subsidies to renewables this year and a total of $60 billion by 2030 (analysis by The Australian, 5 Sept 2017).

We believe that for solutions to be environmentally sustainable, they need to be economically sustainable.

Affordability and reliability are crucial to economic security, and current policy has failed to deliver on both with the Victorian government electing to have business shut down over summer to avoid blackouts.

We expect brown outs and black outs in emerging nations like India. To face the same in a first world country with the wealth, resources and level of technical and social development that should support an affordable, reliable electricity supply, is an indictment on policy and a clear failure of common sense.

Least cost abatement methods need to be identified to ensure a sensible transition toward a zero emissions future can be achieved without jeopardising productivity and living standards.

If the goal is to reduce CO2 and do so with the least amount of consumer pain, then a sensible, affordable transitional solution is to deploy our Coldry technology across Victoria’s brown coal power stations, delivering CO2 reductions for less than the cost of comparable wind or solar solutions.

 

Consumer pain in $9bn power hit for firms | The Australian ($)

Australia’s largest energy users have warned that an estimated $9 billion in additional electricity and gas costs will feed through to the broader economy, threatening jobs and investment, as business drives pressure on Canberra to ease predicted power shortages.

Photo: Tomago Aluminium chief executive Matt Howell at the company’s smelter in the Hunter Valley. Picture: Jenny Evans

Source ($): Consumer pain in $9bn power hit for firms

For those without access to paywalled content, here’s the condensed version:

  • Australia’s largest energy users have warned that an estimated $9 billion in additional electricity and gas costs will feed through to the broader economy, threatening jobs and investment.
  • Major said the bill shock will chip away further at profit margins and could push up consumer ­prices.
  • Economists warn the power bill shock is expected to show up in national inflation figures as early as next month, with an increase of 0.6 per cent in headline inflation for the July-to-September quarter, purely from energy price rises.
  • Rio Tinto chief executive Jean-Sebastien Jacques warns Australia now has a reputation for being one of the most expensive jurisdictions to do business, placing industries at risk.
  • Australia had gone from having some of the most competitively priced energy in the developed world “to having nearly the most expensive’’.
  • Glencore’s head of coal assets, Peter Freyberg, said AGL had stood to benefit from the closure of the Hazelwood power plant in Victoria’s Latrobe Valley this year that contributed to electricity supply concerns.
  • When Hazelwood power station closed, electricity prices went up, hurting all consumers and businesses that rely on electricity.
  • Prioritising “inner-city political aspirations” over affordability and reliability
  • A willingness in parliament to create a level playing field for all forms of energy including coal was essential.
  • Victorian government has ruled out relying on diesel generators to bridge the gap in ­energy supply over summer, ­instead relying on consumers and businesses to switch off during peak demand.
  • Australian Industry Group chief executive Innes Willox called for policy certainty, citing the doubling of energy costs for business, reduced reliability and policy uncertainty.
  • AiGroup report released in February put the cost to all energy users of electricity and gas increases at $10 billion-$12bn a year with households facing a $3.6bn-a-year rise and business an increase of $8.7bn.
  • BlueScope Steel chief executive Paul O’Malley warned the nation was facing an “energy catastrophe” that will lead to industry shut downs if not addressed.