Clean Energy Future

Electricity prices have been going up without a carbon price

The costs of supplying electricity to your home/business is made up of :

• creating electricity at a power station (generation costs)
• getting electricity from the generators to the customers via poles and wires (transmission and distribution, or network costs)
• running retail electricity businesses and complying with climate change initiatives such as the Renewable Energy Target and state or territory-based green schemes (retail costs).

The main cause of the recent price rises has been the increasing costs of transmitting and distributing electricity. These costs have been rising because of increased investment in the transmission and distribution networks. The owners of electricity networks are upgrading them to:

• replace ageing infrastructure
• expand networks so they can cope with peaks in demand for electricity
• meet higher safety and reliability standards in some states.

Pricing carbon affects the price of electricity by increasing the cost of generating power. The majority of Australia’s electricity is generated by burning fossil fuels.

The chart below is from the Commonwealth Treasury. It shows how, over the years, household electricity prices have been rising and are expected to continue to do so.

Figure 1: Household electricity prices in 2012 dollars

The carbon price cost is only a small part

The carbon price cost is small in comparison to the total cost of the other elements that make up your electricity bill.

Figure 2: National average figures provided by the Commonwealth Treasury. These figures include GST.

Carbon pricing changes the relative prices of goods and leads to a small increase in overall prices.

Carbon pricing is expected to add around 10 per cent to household electricity prices in 2012-13 and 9 per cent to household gas prices. The impact on other household prices is much less, mostly less than 0.5 per cent.
The following animation provides you with a graphical representation of how the carbon price affects your electricity bill.

States and territories have different electricity arrangements

The actual impact of the carbon price is different depending on a number of factors, including which state or territory you live and whether your state or territory is connected to large wholesale electricity markets, such as the National Electricity Market on the east coast.

This is because different states generate their electricity from a combination of brown coal, black coal, gas, hydro, wind and solar power.

There is no regulation of retail electricity prices in Victoria or for customers in other States or Territories who have chosen their electricity retailer. In all states except Victoria the price that non-market customers pay for their electricity is regulated by independent regulators (New South Wales, Queensland, Australian Capital Territory, South Australia, Tasmania) or their state/territory government (Western Australia, Northern Territory).

Retail price regulation was removed in Victoria in 2009 as the Australian Energy Market Commission found that competition in this market was effective, and the removal of regulation would provide consumers with a wider range of price and service options.

Table 1: Shows a state-by-state breakdown of the carbon price increase on household electricity bills in 2012-13.

[1]  Estimate derived from ACIL Tasman modelling for the Queensland Competition Authority and gazetted prices for Tariff 11 and Tariff 33

[2] Estimates from 2012-13 West Australian budget and the Western Australian government owned retailer Synergy

Increases similar to Australian Government estimates

The decisions made on state electricity price increases due to the carbon price are all broadly in line with, or lower than, Australian Government estimates.

For more information on state/territory prices:

NSW (IPART) | QLD (QCA) | SA (ESCOSA) | WA (WA Finance) | TAS (OTTER) | ACT (ICRC) | NT (NT Treasury)

Many households will receive assistance to help with increasing costs

The Australian Government is providing $10.10 a week in assistance for the average household. This is in the form of tax cuts and increases in family payments, pensions and benefits – and the assistance is permanent. This helps with the impact from the carbon price which increases the average household electricity bill by about $3.30 a week in 2012-13.

For an estimate of the assistance you may receive visit the Household assistance estimator.

Helping you reduce your energy bills

The LivingGreener website is specifically designed to help you reduce your energy use at home and save on your electricity bill.

LivingGreener has:

• practical advice to help you to save energy and money, reduce water use, reduce waste and travel smarter
• easy to understand information on all available government rebates and other assistance
• guides to help you and your family save power and money as the seasons change, when you’re buying or renovating and as your family grows, including how to understand and reduce your energy bills and how to prepare for a new baby
• real stories from people around Australia who have made changes to live greener and reduce their energy consumption.

A simple rating system is available to show the impact, ease and financial benefits of taking action.

Choosing your electricity retailer

For households in New South Wales, Australian Capital Territory, Queensland, Victoria and South Australia competition in energy markets gives households greater choice and helps put downward pressure on prices. For information on market offers which are available in your State or Territory see:

ACT: Energy Made Easy
Victoria: Your Choice
NSW: My energy offers
South Australia: Essential Services Commission of South Australia (ESCOSA) Residential Estimator
Queensland: Queensland Competition Authority (QCA) Price Comparator

The Australian Energy Regulator also has a range of useful information for customers including:

• how wholesale energy markets operate
• the regulation of network revenue and prices
• how to understand and interpret your electricity bill, and
• your customer rights and opportunities under the National Energy Retail Law.

Other State and Territory energy regulators also have a range of information available where the national energy market framework is not in force.

GreenPower customers

Some households have already supported investment in renewable energy by purchasing GreenPower.

You can find out more about the carbon price by contacting your GreenPower provider.

Business electricity use and the carbon price

Business electricity use is similar to household electricity use. This means that the carbon price impact is likely to be very similar or identical to the impact experienced by households.

Further information

To find out more about household assistance, the carbon price and how to save money on your electricity bills, call 1800 057 590.