Energy market reform essential to save energy and lower bills 18 August 2016
Energy experts have called on Australia's energy ministers to lower the energy bills of homes and businesses by fixing Australia’s energy markets and driving sensible, cost effective energy efficiency.
“Energy bills in Australia have risen dramatically over the last decade. The sad fact is that poor regulation, excessive spending on poles and wires and a lack of focus on energy efficiency have short-changed mums and dads around the country,” said Luke Menzel, CEO of the Energy Efficiency Council.
Recent electricity price spikes have started a major national debate on how to reform Australia's electricity system. Australia’s energy ministers are meeting in Canberra this Friday 19 August, and the new Federal Minister for Environment and Energy, Josh Frydenberg, has put electricity reform at the top of the agenda.
“Electricity price spikes in South Australia have outraged many energy users, but this is just the tip of the iceberg. Electricity network companies have spent billions on infrastructure that could have been avoided if we’d properly managed demand, and consumers are picking up the tab,” said Luke Menzel.
The cheapest way to meet Australia’s energy needs is to balance investment in energy supply with smarter energy use. The simplest example is keeping an off-grid house cool in the summer. If the homeowner doesn’t invest in an efficient air conditioner, they’ll have to pay more for the equipment that supplies them with energy (a larger and more expensive generator).
However, Australia's electricity systems don't follow this basic principal. Instead, there are biases in our electricity systems that drive over-investment in energy supply and under-investment in managing demand.
In 2002 Warwick Parer, a former Coalition Energy Minister, led a review that concluded that the NEM has a supply-side bias that raises energy bills. Since then a raft of reviews have found major problems with the NEM, including a Productivity Commission review in 2013 and two separate Senate Committee inquiries in 2012 and 2014. However, these problems still haven’t been fixed.
Last month the Energy Efficiency Council (EEC) released a comprehensive plan to keep energy affordable, the Australian Energy Efficiency Policy Handbook.
Key recommendations include:
- Ensuring that electricity tariffs are fair and encourage smart investment
- Overhauling the way that electricity networks are regulated
- Improving standards for appliances, buildings and vehicles to protect consumers; and
- Saving energy in homes, businesses and public buildings.
“With a wave of new investment in renewable energy and storage on the horizon, it’s essential that we fix the flaws in our energy system,” said Luke Menzel. “If we just focus on addressing issues with our energy supply, we’ll only be tackling half the problem and bills will continue to rise.”
“We applaud Minister Frydenberg for recognising the importance of energy efficiency. In 2015 he set a target to improve Australia’s energy productivity (a measure of energy efficiency) by 40 per cent by 2030 and signed a new National Energy Productivity Plan. However, we won’t reach our target and the Plan will gather dust unless we invest in real action,” said Luke Menzel.
“It’s essential Australia's energy ministers work together to fix both the supply side and the demand side of the market,” concluded Luke Menzel.
The Australian Energy Efficiency Policy Handbook is available at the EEC website: www.eec.org.au/handbook
Head of Policy
Energy Efficiency Council
M: 0414 065 556