Power prices will not fall without a change in policy

July 01, 2019




MONDAY, 1 JULY, 2019



SUBJECT/S: Power prices, cap on standing offers, new coal-fired power, renewable




STEVE PRICE, HOST: Customers currently being stung by their energy retailer will automatically switch to a newer, lower price, determined by the Australian Energy Regulator. Does that happen? Will it happen? It’s expected to benefit 800,000 people. As I said, I’ll believe it when I see it. There’s a cap on prices on standing offers, saving customers up to an estimated $481 in South Australia, $663 in NSW, and about the same in Queensland. We are chasing a spokesman for the Australian Energy Regulator. I just don’t see these prices coming down. It hasn’t happened. And it was an election promise. Pat Conroy is the Shadow Energy Assistant Minister. Thanks for your time. Morning.


PRICE: Good. I’m not getting people ringing me up saying they’re being knocked over by the energy prices coming down. It’s not happening.

CONROY: No, and it won’t. The full price offer is a small improvement but it will only help around the edges. There’s a fundamental misshape in the energy market which means that power prices will only go up and up and up until we get some policy certainty in Canberra.

PRICE: So, this idea that you would automatically be reverted to a lower company power price, is that not going to happen?

CONROY: It will happen, but it only helps a small number of customers. Most customers are on what’s called market offers – they negotiate, they get a discount from their energy provider. This only applies to people who just ring up and say, I want my electricity connected. And those standing offers have been very high. So, this policy will reduce those standing offers a bit. And that will help a few customers and that is a good thing. But as I said most customers have signed up to one of those discount rates from the energy companies where they get 24 per cent off, or 20 per cent off, whatever, if they pay on time. So the main issue is that most customers won’t benefit from this policy announcement and it doesn’t help the real driver of power prices going up and that is the cost of actually generating the electricity.

PRICE: What would you do?

CONROY: We’d provide some policy certainty so that we could get some much needed investment in new power plants.

PRICE: Would bills be lower under Labor?

CONROY: They would be lower compared to what the Government is projected to have. In fact, independent modelling has shown that what we took to the last election would lower power prices by 25 per cent against what was to occur. The key thing is to drive new investment, to build new power stations, to drive power prices down. We’ve had a lot of old coal-fired power stations retiring due to their age, and we haven’t had sufficient replacement, which means power prices are skyrocketing.

PRICE: So would you support the construction of a new-generation coal-fired power station?

CONROY: Not if it involves government subsidies. The basic fact is that new coal-fired power …

PRICE: But you’d support it if it was private enterprise?

CONROY: Well, over the last 10 years we’ve seen not a single private company stick their hand in their pocket to build a new coal-fired power station.

PRICE: But if they did, would you?

CONROY: Well, we’ll cross that bridge when we get to it.

PRICE: It’s pretty simple, Pat. Yes or no.

CONROY: The last coal-fired power station that was built in this country was in 2002.

PRICE: It’s a yes or no answer, isn’t it?

CONROY: Well, Steve, we haven’t seen any proposals. But let’s go back to basic facts.

PRICE: Yeh, but I just want an answer to that question. If somebody independently of government was prepared to invest in a new-generation coal-fired power station – and they’re building hundreds of them in India and China – would the Labor Party support the construction of that facility?

CONROY: Well, the Labor Party hasn’t adopted a formal position on it. My personal view is I am comfortable with it as long as we actually have a decent carbon abatement target in the economy and mechanisms to cut carbon pollution to reach responsible goals. But the key fact here is …

PRICE: This morning, I’ve got people ringing me up saying they are lying under three doonas with blankets over them because they can’t afford to heat their house.

CONROY: But Steve, a new coal-fired power station is not the answer if you want to lower power prices. The Australian Energy Market Operator, which is the Government agency, and not aligned with the Labor Party, has found that the cheapest new form of power is new renewable energy backed up by gas-fired power stations or pumped hydro. That is the cheapest form of new energy. So, people who are talking about building new coal-fired power stations are advocating for higher electricity prices, not lower. The cheapest new form of power is wind and solar, backed up by pumped hydro, and that’s a basic fact around the Australian energy market that seems to be ignored by a lot of proponents of new coal.

PRICE: Appreciate your time. Thanks for it.

CONROY: Not a problem, Steve.

Listen to the interview here