"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Friday, June 15, 2012

Green RET scheme a secret tax.

The carbon tax is a major driver of electricity price rises but the "green" Renewable Energy Target" of RET scheme is a close second. In Queensland one in three houses are now getting free or very low cost power at the expense of their neighbors in this idiotic scheme. Solar power fed to the grid from these backyard generators is bought at 44c per Kwhr by the utilities compared to the wholesale price of about 5c per Kwhr.
Unfortunately because of the green stranglehold on public opinion in this area, paying stupid prices for unwanted electricity is bi-partisan policy with the Coalition unwilling to oppose it.

JULIA Gillard is in more trouble than Flash Gordon over the impact of the carbon tax on electricity prices.
The Prime Minister and Climate Change Minister Greg Combet are both furiously splitting hairs over what the real cost of the carbon tax is for consumers compared with what the federal Treasury has predicted.
Gillard and the minister go into excruciating detail, down to a couple of decimal points, as to the forecast cost and the actual price rises to demonstrate that the compensation for low-income households will be greater than the cost.
This is the essential political message: low-income households will be overcompensated for the carbon price rises and the "big polluters" will pay for the billions forwarded into family bank accounts to cover rising power and food prices.
The government can no longer hide the fact that prices will rise. But through the taxpayer-funded advertising campaign, which doesn't mention the words "carbon tax", it argues that families feeling the pressure will be more than looked after.
There are two basic problems with this approach, the first of which is that all price rises will be blamed on the carbon tax and you will never convince voters that prices are lower than they were "before" or that the government compensation will cover the extra outlays.
The second problem is that there is a hidden carbon tax - the renewable energy target - which is pushing up electricity prices as much, if not more than, the carbon tax, given there is not any compensation attached to the price rises the RET causes.
The RET is already pushing power bills up and will continue to do so, sometimes at a greater rate than the carbon tax.
This is a structural, political and policy problem for the Gillard government as it approaches Carbon Tax Day, July 1 - and one that it appears powerless to address.
The only reason we haven't heard much about the RET - in contrast to Tony Abbott's labelling of the carbon tax as the "great big tax" - is that having mandatory renewable energy targets is a bipartisan policy.
The upshot is that a large slice of energy price rises come from a contradictory and self-defeating policy of favouring renewable energy forms over fossil-fuel energy to the extent of subsidising their creation - sometimes in perpetuity - despite economic and practical arguments against such a course.
This subsidising of economically inefficient power sources is part of the latter-day problems of European economies that have had to roll back power programs and government loans for renewable energy developments.
European powers such as Germany, Spain and Italy plunged into renewable energy development, lending government money and providing subsidies to encourage expansion, at times of strong economic growth - only to find the currently economically inefficient systems draining government coffers and propping up unsustainable industries.
Various subsidies have had to be abandoned in Europe and huge companies that had promising futures have gone into renewable retreat.
The Gillard government has acknowledged the carbon tax is a major cause for energy price rises, which already amount to much of federal Treasury's predictions of a 10 per cent rise over four years. But the latest round of state budgets and pricing authority decisions have highlighted the companion problem of the RET.
The main public dispute and debate continues to swirl around whether the carbon tax compensation is enough to offset the flow-on effects of the carbon tax.
It seems unlikely any voters paying household bills are going to accept the legalistic and hair-splitting argument that the carbon tax is not levied directly on households.
This is a point Gillard makes often and one Wayne Swan felt compelled to make in his budget speech.
The Opposition Leader makes political hay with these claims because householders know the price of electricity goes up because of the carbon tax and they are footing the bill regardless of how the impost is applied.
Yet Abbott does not rail against the RET or point to its price impact because the Coalition has a similar policy with similar effects.
The Coalition is committed to removing the carbon tax. The opposition's policy makes more economic sense than Labor's, given the government has decided to make the "market" set the price but impose completely artificial constraints that will skew the price of power.
Yet there is still silence about the hidden carbon tax.
Abbott made much of the carbon tax price rises in state budgets yet other green schemes are costing consumers just as much.
This is what the NSW Independent Pricing and Regulatory Tribunal had to say about price impacts on energy and price rises in the state: "From July 2012 the cost of complying with green schemes will contribute around $316 on average to an indicative regulated electricity customer's bill in NSW.
"For customers with larger average electricity usage (greater than 7MWh) the impact of green schemes will be larger in dollar terms.
"In percentage terms, the cost of complying with these schemes has been the fastest-growing proportion of a customer's bill over the past two years."
It is worth pausing there to consider that the independent power-pricing authority is saying businesses will face even bigger rises in power bills because of the green schemes and that these rises - not those related to the carbon tax - have been the fastest-growing part of power bill rises in the past two years.
This is not to say the carbon price will not have its own large, direct impact, the tribunal found.
"The introduction of carbon pricing mechanism . . . will be the largest average contributor to regulated customer bills in 2012-13, costing around $170," IPART said.
But then the report went on to say that "the next-largest contributor to customer bills in 2012-13 is the costs of complying with the RET scheme (costing around $102)".
So, businesses will pay more for RET than households through their power bills, and in some cases more than the direct cost of a carbon tax. And, of the $316-a-year rise in power bills in NSW because of various green schemes, levies and the carbon price, Gillard's "great big new tax" accounts for most but nowhere near all the increase.
Renewable energy schemes and subsidies are the hidden - and already operating - factor in electricity price rises. But you won't hear about this secret tax because both sides are committed to economically counter-productive renewable energy schemes before they are economically viable.

1 comment:

  1. I'll never vote Labor againJune 16, 2012 at 2:00 AM

    Can someone please remind me what this loony Carbon Tax is actually supposed to achieve?