Australia’s energy cost crisis

The debate around climate change, renewable versus coal energy and soaring power prices has been the undoing of some Australian prime ministers in recent years. As the nation heads to another election within months, these thorny issues are once again likely to take centre stage.

During the past 10 years, Aussies have seen their power bills soar by around 35 per cent. Prime Minister Scott Morrison blames the electricity generators and is threatening them with a ‘big stick’.

Yesterday’s release of the Labor Party’s energy policy took a wider view of the problem. It acknowledged that the chopping and changing of energy policy under successive leaders has removed incentives for new power generation to be built.

As a result, when some of the nation’s ageing coal-fired power stations were shut down, the electricity market responded with higher wholesale prices, which eventually trickled down to you – the consumer.

Energy Minister Angus Taylor’s response this week to high power prices was to flag the introduction of legislation to force asset sales of electricity suppliers who “don’t act responsibly” and to partially regulate prices. This backflip from free market policies into an era of government intervention had some in corporate Australia warning that the sector could be starved of new investment, as investors chase returns in areas with less government intervention.

Other voices champion a return to the old days of publicly owned utilities that did not put profits and dividends for investors ahead of customer needs. But have the nation’s remaining government-owned power companies delivered better value?

In NSW, where some generators are still in the public’s hands, the average price for electricity is 33.1118c/kWh, compared with Victoria, whose electricity assets are all privatised, where the average price is 28.2461c/kWh, according to Canstar.

The Greens have recently advocated for a publicly owned power company that would slash electricity bills to an average $600 a year, citing that state governments made $3 billion in the past year from energy. They also claimed AGL and Origin made a net profit of $7.2 billion in the past four years.

It’s difficult to know who to believe when it comes to the blame shifting for our rising power bills.

Hopefully, the Australian Competition and Consumer Commission (ACCC) will be able to shed some light on this with its recently announced decision to monitor power prices for the next seven years. It will report every six months on how bills are tracking in the ACT and all states except Western Australia, where the state government runs the power supply.

“If we find problems in the market that aren’t being fixed by existing policy tools, we will be making recommendations to government on what extra changes are needed,” according to ACCC chief Rod Sims, who admitted last month that even he struggled to understand which power plans would deliver the best value for money.

And in another measure being promoted by Mr Taylor, pressure will be put on energy companies to scrap standing offers by the start of next year, otherwise the Government will introduce a default market price.

These strategies are all well and good, but again, are those in government making decisions based on being elected, rather than what the people want, or what is best for our future beyond financial consequences?

So, we’re asking you about your thoughts on Australia’s energy dilemma.


And of course, please feel free to make comments or add to the conversation below.

Written by YourLifeChoices Writers

YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.

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