ECC Energy Update - April

by Jordan Valageorgiou - Wednesday, 20 April 2011

Retail prices for electricity in Australia have risen 30% over the last four years. This is without a Carbon Tax in place, and with less electricity being used by household consumers in some states in Australia.

In New South Wales, energy consumption for households actually fell by 5% over the five years to 2010.

 So why are we seeing these large price increases?

The media suggests that the costs are increasing because we are paying for new green energy sources, but that only amounts to a small part of the price increases.

The major costs driving up electricity bills are the need to upgrade the generation and transmission of electricity – the power stations, poles and wires – to supply enough energy so we can meet peak demand.

Peak demand means that we make enough electricity to meet people’s needs – like on hot summer days when we need the air-conditioning up high. And because of the hotter weather and bigger extremes in temperatures more of us have installed air conditioners and pools, with their energy-thirsty pumps, in the last few years.

So not only in our homes, but also at our workplaces, shopping centres and schools, the demand for electricity increases on these hot summers days – and demand keeps going up and up.

Household energy use was about 28% of demand in 2008- 2009 – 72% of demand in that period from industrial and commercial electricity users.

So there are a number of factors contributing to this price increase, and not just climate change initiatives.

 We all want a secure supply of energy and we don’t want brownouts (short periods when electricity is not available) when we need energy the most.

Australian industry and households have all benefited from relatively low prices for many years according to an Australian Industry Group (AIG) report. The report highlights the urgency of a political consensus on Australia’s clean energy future, including a price on carbon and greater efficiency, but also safeguards to prevent low income households plunging further into poverty. 

This report informs us that old fashioned energy from sources that cause carbon pollution will not stay cheap, regardless of whether we price carbon or not. 

Most households and businesses benefit from improvements in energy efficiency and the higher prices should encourage an investment in efficiency starting now.

This transition will be difficult for some because of the initial expense – but in the long term it will help by lowering the amount of energy used as prices rise in the future. 

There are a number of programs that provide rebates and other financial support to businesses and householders. For information about these energy efficiency programs visit the website www.environment.nsw.gov.au or contact energy@eccnsw.org.au.