Queensland Government’s energy announcement a mixed bag

Tuesday 6 June, 2017 | By: Joseph Kelly | Tags: powering Queensland, energy prices, power bills, Finkel report

The pre-Budget announcement to invest in energy supply for Queensland takes some general steps in the right direction, but will not reduce electricity prices for businesses in the short to medium term.

The Chamber of Commerce and Industry Queensland (CCIQ) welcomes initiatives that will go to addressing Queensland’s serious challenges for energy cost and supply, but warns the State Government against raising expectations beyond the true scope of the plan.

Ultimately, the suite of energy policies announced yesterday will still see an increase in prices for small businesses this year.

More than 550 small businesses have been disconnected from the market this year alone, following an 11.2 per cent increase of electricity prices this financial year, with a further increase of 4.1 per cent expected next financial year.

CCIQ welcomes the investment and infrastructure plans in northern Queensland, however businesses will not see any cost relief for some time.

blog1 What the action plan means: 

1. This is not price relief, but reducing a price increase. The Solar Bonus Scheme was introduced in 2008 to encourage consumers to install solar panels to which a 0.44 cent per kwh feed-in-tariff would be paid to owners. This cost was to be borne by all Queensland users on the electricity grid. This increased consumer’s bills between 5-10 per cent. As recommended by the Queensland Productivity Commission the SBS must be discontinued prior to its 2028 sunset date. CCIQ has called for its abolishment on numerous occasions. This action by the State Government clearly demonstrates the scheme is unnecessary and an unequitable price burden on small businesses.

2. This will increase supply in a tightened market. However, it is false to assume this will reduce prices. Prices have been driven up by a lack of gas supply in the market and soaring gas prices domestically. Low-cost supply will need to be injected to place downward pressure on electricity prices.

3. Directing Stanwell to review its bidding process may have an impact on reducing prices, however this would only be the case if Stanwell had been taking higher than necessary margins all along and / or the market conditions become more favorable.

4. Common sense. Amalgamating generators under one Government Owned Corporation (GOC), pending restructure, could reduce operational costs and regulation inefficiencies.

5. Confused messgaing. This was an infrastructure and jobs announcement, not an electricity prices announcement. Green energy infrastructure in the long term is good as prices to build are coming down and they produce energy at a fraction of the cost. However, we are nowhere near seeing these reductions on bills. Importantly, green energy has issues in relation to reliability and security. The government will need to continue to rely on coal and gas powered generators to ensure consistent baseload power is provided.

6. We are in a national market; we need national approaches and cohesion across all stakeholders. Queensland should abandon its 50 per cent reduction. If Queensland secures sufficient funding for green power for the NEM it may bring our emission reduction to 50 per cent, funded by the Federal Government. Price relief should be driving our energy policy.

7. This will add more renewable energy into the grid, however it will only bring prices down if provided to utilities lower than the current rate.

8. Just smart planning and housekeeping. Eventually might benefit the grid

9. Planning for the future, CCIQ welcomes the body appointed to implement the Finkel findings and provide expert advice to the government moving forward.

10. The market requires more gas to be sold domestically, however we are years away from seeing results.

11. How can the Queensland Government advocate for integrated policies when it is marching to the beat of its own drum? Queensland has a climate policy and target and has actioned an energy plan which will achieve this goal, putting climate policy ahead of price relief. This will see investment in infrastructure, however will mean further costs on consumers in the short to midterm.

Overall these measures may create some jobs however this will not reduce prices. Long term we may see downward pressure, however market conditions also need to change for the positive.

The “action plan” was announced days prior to the Finkel Report being handed down, an upcoming COAG meeting and prior to any feasibility studies, yet promises thousands of jobs and a reduction of electricity prices.

Queensland Treasurer Curtis Pitt has been quoted as saying this will not bring prices down, just reduce the increases.

“We have had a systemic failure by all levels of governments and all parties. We need a plan that will modernise the national grid, that will reduce soaring costs.” says Kate Whittle, CCIQ General Manager of Advocacy.

“CCIQ is calling for all States and the Federal Government to put politics aside and come up with an effective plan to solve the energy crisis, driven by the principle of putting downward pressure on prices.

“Queensland is allowing its renewable energy target to dictate energy infrastructure decisions, compromising affordability, security and reliability. The Queensland Government needs to get its priorities straightened out.

“It would be fantastic to achieve a 50 per cent reduction of emissions, but at this rate we’ll only achieve it because 50 per cent of small businesses can no longer afford to turn on the lights.”

CCIQ disputes claims by the State Government that it has saved small businesses $90 on their power bills. It is the same as going to the shops and buying a pair of shoes for $50 off. You haven’t saved $50, you have just spent less than what you thought you would have to.

CCIQ’s State Budget Submission calls on the Palaszczuk Government to:

  • Introduce retail competition to regional Queensland
  • Implement education initiatives to put the power in businesses hands to effect change
  • Reduce return on revenue from transmission and distribution networks
  • End the Solar Bonus Scheme

Small businesses need more than a plan, they need action.

 

 

 

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