Page 1437 - Week 04 - Wednesday, 24 March 2010
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suggests that there are three main reasons for this: firstly, low income earners tend to live in areas more likely to be adversely affected by climate change and are less likely to have the flexibility and the resources to adapt; secondly, on average, low income earners spend a greater proportion of their total weekly household budget on energy and water, essential services for which prices are inelastic and for which price can be a blunt, regressive and unreliable tool for demand control; and, thirdly, low income households are currently less able to introduce measures to improve energy efficiency in terms of both capital improvements and updating appliances.
While the first of these may not apply in a geographical sense in the ACT, it is applicable in that low income families are more likely to be renting and may also be living in less energy efficient homes to start with. The latter two are clearly applicable to the ACT, as they are anywhere else in Australia, and are central to energy policy development, particularly in regard to price deregulation and time-of-use metering, as I will discuss shortly.
So what are the policies that will impact on energy prices? Of course, any price on carbon, such as implied under the CPRS or through a national carbon tax, will have an impact on energy bills as we move to phase out fossil fuel generation and towards the generation of renewable energy. That, of course, is the purpose of a price on carbon—to more accurately account for the cost that the release of carbon dioxide has on our environment, a cost that currently is not factored into the price of electricity. However, if an accurate price on carbon is applied we should, over time, see a more level playing field in regard to electricity generation that will encourage a growth in renewables. This, in turn, will expand the industry in such as way as we will start to see a drop in cost per unit of renewable energy generation.
In the ACT, feed-in tariff polices, as well as other renewable energy purchases, are likely to have impacts on the electricity bills for Canberrans, but this is not a reason to not implement those policies. Rather, it means that we need to identify what those impacts will be and ensure that those who are not able to absorb those impacts are clearly identified and supported.
An issue that the government highlighted in its draft sustainable energy policy—it has flown somewhat under the radar, I have to say—is that of deregulated electricity prices, smart meters and time-of-use tariffs. The argument put forward by the government is that electricity price deregulation will deliver increased competitiveness in the market and will drive efficiency. However, electricity is an essential service. As I mentioned earlier, some people do not have discretionary control over the amount of electricity they use; therefore, efficiency gains can be hard to achieve.
In the short term, deregulation may lead to prices rises, as energy retailers have already argued that in the ACT the regulated price is too low. Discussion of deregulation of the retail price was limited in the draft policy, and we would encourage the government to fully assess the impact of it on low income households.
Smart meters are also mentioned in the government’s draft energy policy. Smart meters bring an increased awareness of the value of electricity and can lead to
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