Wednesday, 29 October 2014

Greg Hunt and the paid polluters' 'lower' electricity prices

Greg Hunt and the paid polluters' 'lower' electricity prices

Greg Hunt was bubbling over at sealing the deal with Big Clive Palmer last night (Image screenshot ABC 7.30)

With Greg Hunt boasting on ABC 7.30 about yesterday’s
deal with Clive Palmer, as well as the repeal of the “carbon tax”,
Lachlan Barker looks at his dubious claims about lower electricity

FEDERAL ENVIRONMENT MINISTER Greg Hunt was in high spirits on the ABC last night after sealing a deal
with coal mining magnate and Federal MP Clive Palmer to establish a
Soviet-style fund to pay Big Carbon taxpayers’ money to voluntarily stop

He was in such good spirits some unkind people have even suggested
that he may have partaken in one too many celebratory champagnes after
the press conference announcing the deal , just before his interview with Leigh Sales on ABC 7.30.
This seems unkind, though there certainly did not seem to be much
sensible information emerging from his mouth during the course of the

One of the things Hunt did want to gush out ‒ and did so, over and
over again, speaking over Sales, much to her annoyance ‒ was that he had
also recently managed to repeal the carbon tax, “lowering electricity prices” for consumers.

Indeed, Hunt and Finance Minister Mathias Cormann have both recently released press releases
crowing about a drop in electricity prices and how this is due to the
repeal of the carbon tax. None of their media spin, however, mentioned
why power prices are so high — network charges, and the gold plating of the poles and wires. What’s worse, the Australian Bureau of Statistics
(ABS) even says, literally in black and white, that it is impossible to
quantify to effect of removing the carbon tax on electricity prices.

It’s the vibe, man!

I contacted Cormann and Hunt to ask if they could explain how they
can link the price drop to the carbon tax repeal when the ABS clearly
says it can’t.

The environment minister’s press secretary, could answer the question, instead mumbling something about:

“… mums and dads are seeing real changes in their bills”.

The Finance Minister’s office obviously knew they were on a loser and didn’t care to respond.

So, why did the price drop?

Well I checked with several experts and none had a definitive answer.

However, Associate Professor Mark Diesendorf
of the University of New South Wales’ Institute of Environmental
Studies did gave a speculative answer when I asked him if he knew why
the electricity price had dropped 5.1%, to which he replied:

‘No doubt the removal of the carbon price contributed, but so is
the growing contribution of wind power in South Australia, which is
clearly reducing wholesale electricity prices there.’

No mention of that from happy Greg Hunt, of course.

Nevertheless, Hunt has been trumpeting power bill savings following the repeal of the carbon tax.

Here is an example of Hunt’s claims, taken from an interview with Steve Price on Sydney’s home of Alan Jones, 2GB:

“If you’re with Lumo Energy, you had an 8.7% reduction in terms of the carbon tax being taken off. EnergyAustralia 8.9%; Simply Energy
10%; and if you were with Simply Energy for small business, a 9%
reduction. And if you’re using gas, similarly we’ve had very large

When I first read this, I thought the minister had derived these
figures using actual power bills. But that’s not the case; it turns out
that the minister was simply relying on ‘data’ given to him by these
power companies.

So I went away and checked and it turns out these are power company
estimates only — and ones with enough get out clauses to satisfy

Here how EnergyAustralia arrived at their “estimate”:

The estimated annual average cost savings for
residential electricity customers are based on the carbon price per MWh,
loss factors, MWh per annum used, the estimated customer bill for the
financial year 2014-15 for each State/Territory and EnergyAustralia’s
implementation costs.’

Clear as mud!

And they’re all like that.

Powerdirect, a subsidiary of AGL ‒ a company the minister’s press secretary put me on to ‒ even says on its home page prices may increase:

Although the price reductions due to the removal of
carbon tax are being backdated to 1 July 2014, some customers may see an
overall increase to their energy rates due to these other changes.’

‘These other changes’ refer to recent price changes, unrelated to the carbon tax, in Queensland, NSW and South Australia.

The point here, just to reiterate, is that Hunt and Cormann can’t
link the entire electricity price drop to the repeal of the carbon tax.

They may be able to in the future, but not now.

So, when the minister said in his radio interview “you’ve had an 8.7% reduction”, he was flat out lying.

To be accurate, Greg Hunt should have said:

“You may receive a reduction of 8.7%."

But even then, I wouldn’t count on it.

As mentioned previously, the real reason power bills are so high is
because of the power company’s outrageous network charges. I’ve written
on this topic myself, but it is clear I need to cover the topic again.

This year, Origin ‒ one of the industry’s biggest players, with 4.3 million customers ‒ is forecast to increase its profits by 10% to $784 million.

So clearly, if they are planning to put their prices down due to the
scrapping of the carbon tax, then they are planning to get their profit
increases elsewhere. Maintaining high network charges will be a part of
it, while another may be using cheap gas from Queensland to bring down the cost of generation.

Greg Hunt even referred to this in his radio interview and, as usual from our Coalition Government, it’s (still) all Labor’s fault:

“Under Labor electricity prices went up, according to the Bureau of Statistics, 101% over their six years.”

Now, this is widely agreed, even by me, which leads to the question: isn’t it time the LNP did something about it?

So I called both Greg Hunt and Matthias Cormann and asked them that, asking them both:

If power prices went up 101% during Labor’s term of office, is
this because of network charges, the ‘gold-plating’ of the poles and
wires? If so, are you going to legislate to reduce these charges?

Greg Hunt’s office referred me to Energy Minister Ian Macfarlane, so I forwarded the questions, and got (shock!) a response.

A spokesperson for the Energy minister said that his Government will be:

‘… providing consumers with more information to manage their
electricity use, and ensuring the regulatory framework minimises red
tape and extra costs for electricity suppliers, which are ultimately
passed on to the consumer.’

So, in other words, they will be telling consumers to use less power,
while at the same time removing any regulatory safeguards to stop power
companies gouging you for every cent you’ve got.

By the way, once again, the smart operators in Matthias Cormann’s office knew they were on a loser and did not respond.

Let’s summarise what we’ve learnt today.

Firstly, the repeal of the carbon tax will have little or no effect on your bill — it may even go up.

Secondly, the Federal Government refuses to deal with the real reason
that power prices are so high ‒ network charges ‒ in any meaningful
way, instead dealing with the problem by diversion and spin.

As ever, these articles on power prices are paradoxical for those of us who care about the environment.

Clearly, none of us want those on low incomes to be struggling to pay
their power bills to fuel power company profits, yet the greed of the
fossil fuel based power companies ‒ in league with their partner and
protector the Federal Government ‒ is leading to a rush to install
renewable power in the home.

Fifty thousand solar panels
were installed in NSW in the first three months of this year in an
effort to reduce crippling power bills — giving a current total of 1.3 million Australian homes
now with solar panels on their roofs. Therefore, ironically, power
company greed is having a bizarre ‘good for the environment’ effect.

Finally (and this really sums up the power companies’ desire to
protect the environment, AKA, nil) when I was doing my research, I went
to the AGL home page to read their spin and found this job ad:

'Envrionment' — really?

When an energy company can’t even spell ‘environment’, you can be pretty certain they couldn’t care less about protecting it.

But then again, we have an environment minister so in raptures over
repealing a price on carbon and sealing a deal with a coal miner to pay
polluters taxpayer’s money to please stop polluting he is utterly
insensible on national television.

What did Australia do to deserve this?

Lachlan Barker blogs at You can follow him on Twitter @cyclonecharlie8.

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