newsdog Facebook

Cheaper power bills: Government intervention blamed for high electricity prices

The Advertiser 2019-10-08 04:34:00

Knee-jerk government intervention in Australia’s energy market has pushed up power prices and is hurting investment in the sector, a think tank says.

The national energy market will need about $400 billion in new power-generating infrastructure over the next three decades, the Grattan Institute said in a report released today.

But policies such as the federal government’s touted “big stick” power legislation, which would allow it to break up energy monopolies, are hurting investment.

“Recent and current government actions imperil the success of Australia’s great energy transition,” the report says.

State, territory and federal governments interventions in the sector had been “ineffective at best, or counter-productive at worst”.


The federal government’s climate policy “vacuum” also meant state and territory governments had stepped in with “uncoordinated and chaotic renewable energy targets”.

But the institute said while the federal government sat out, state and territory governments should work towards a nationally consistent emissions reduction policy.

“While a national policy led by the federal government would be ideal, a state-based policy would be far superior to no policy at all,” it said.

The institute said projects such as the South Australian government’s “rushed” investment in diesel generators or the federal government’s Snowy 2.0 project crowded out other investment, which could better address market needs.

“Significant amounts of renewable generation are being built in response to the closure of coal power stations and higher prices,” the report says.

But while investment in renewables such as solar or wind was good, the institute said it had to be backed up with dispatchable generation — power that could be activated on demand, such as hydro — to keep prices low and guarantee reliability.

The report said power company’s profits appeared to have peaked, but would decline further as new investment came online, with the rise in profits not matching the rise in prices and contradicting the motivations behind the federal government’s “big stick” policy.

The institute made multiple recommendations, including pushing governments to take charge of climate policy, cutting red tape and investing in power transmission infrastructure.

Originally published as Real reason your power bill is so high