Energy experts slam Labor’s $1000 power bill savings claim

Energy price experts have rubbished a claim made by the Albanese government that renewables will slash $1000 a year from power bills. See why.

Exclusive: Energy price experts have rubbished a claim that renewables will slash $1000 a year from power bills, which is contained in official advice the Albanese government used to set Australia’s 2035 emissions reduction target.

The claim has been labelled a “bald-face lie”, because it hides the fact that the “absolutely enormous” cost of new electricity generation, transmission and storage assets is increasingly being funded by people on the upper end of the tax scales – instead of through bills as was once the case.

In announcing the 2035 target for an emissions cut of 62 to 70 per cent, the Prime Minister said Labor had accepted advice from the Climate Change Authority, chaired by Liberal Matt Kean.

Anthony Albanese’s government has claimed the average household would save about $1000 a year over the next decade thanks to a rollout of renewables. Picture: NewsWire/ Gaye Gerard

The former NSW Treasurer, Climate Change and Energy Minister’s advice to the government said “expert analysis by the Australian Energy Market Commission projects residential electricity prices will fall by 13 per cent (or) about 5c/kWh and average household energy costs will fall by about 20 per cent (or) around $1000/year over the next decade under a co-ordinated renewables rollout.”

The AEMC predicts most of the drop will occur by 2027 as more renewable supply connects to the grid. Coal station retirements would not have a sustained impact on prices.

The AEMC noted that its analysis “includes the costs of government schemes that are recovered from residential bills. It does not include costs that are funded by the broader taxpayer base, as these are not reflected in bills.”

But that distinction is not mentioned in the advice from the Climate Change Authority, released on Thursday.

Climate Change Authority chair Matt Kean. Picture: Rohan Kelly

Leading energy price expert Bruce Mountain told this masthead that if the “absolutely enormous” cost of new renewable generation, transmission and storage “was borne by consumers, then prices would almost certainly have to rise.

“Instead, the cost will be borne disproportionately by the higher-rate taxpayer effectively through the taxation system,” Professor Mountain, of Victoria University’s Victoria Energy Policy Centre, said.

The trend towards recouping new energy system costs from taxpayers instead of through power bills began with Liberal PM Malcolm Turnbull’s Snowy 2.0 project.

“Since then successive governments – both of the right and left but mostly Labor – have expanded subsidies borne by taxpayers,” Prof Mountain said.

Leading energy price expert Professor Bruce Mountain, of Victoria University’s Victoria Energy Policy Centre.

Frontier Economics managing director Danny Price, who did detailed research into both Labor and the Coalition’s energy plans before the last election, said the $1000 a year cost drop claim was “so dishonest.”

“I wish governments would stop lying like this,” Mr Price said.

“I suspect most Australians know that it is a bald-faced lie and that those claims just can’t be supported.”

“Either electricity prices will rise or taxes will remain high or rise – or possibly both,” Mr Price said.

Originally published as Energy experts slam Labor’s $1000 power bill savings claim