Former Labor minister Patrick Conlon urges carbon price to fix electricity system

A SENIOR state Labor figure is urging a carbon price on electricity to lower household bills by kickstarting investment in new-generation power plants.

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A SENIOR Labor figure is urging a carbon price on electricity to lower household bills by kickstarting investment in new-generation power plants.

Former state energy minister Patrick Conlon, writing in today’s Advertiser, warns Australian electricity consumers are at the mercy of big, old, dirty and cheap coal-fired power plants and failure to impose a carbon price is thwarting new investment.

“Reliance on old, under-maintained coal burners flirts with disaster. If a couple of big units break down during a hot, high-demand summer, price hikes will obliterate any benefit of cheap coal,” writes Mr Conlon, energy minister from 2002 to 2011. “In that scenario you could see rolling blackouts and gas plants restarted at massive prices.”

But Mr Conlon argues investment in new coal generators has been paralysed because a carbon price on electricity is seen as inevitable.

However, the lack of a carbon price means coal is cheaper than clean gas-fired plants, like Adelaide’s Pelican Point.

Mr Conlon urges setting a carbon price on electricity to encourage “new-generation” investment, allow high-efficiency plants like Pelican Point to operate and drive down long-term generation costs.

“You cannot fix our electricity system without fixing carbon. Recent history makes that plain,” he says.

Former state energy minister Patrick Conlon.

Labor’s carbon tax, introduced in 2012, was abolished in mid-2104 as part of an election promise by former prime minister Tony Abbott, who declared this would save households $550 per year.

Prime Minister Malcolm Turnbull in April warned Labor’s emissions trading policy, which included sourcing half of the nation’s electricity from renewables by 2030, would drive up prices.

A national report last week warned SA will be at greater risk of blackouts because of power shortages caused by a downturn in coal-fired generation to meet Australia’s emission reduction targets.

Mr Conlon, the architect of SA’s 21st-century electricity system, says the state’s reliance on wind power, in particular, is not to blame for high electricity prices.

“It is true that the total cost of wind farm-produced electricity, including capital investment, is higher than coal. But it is simply not this differential that is driving cost,” he says.

“It is the reliance on interstate generation and a single interconnector that forces retailers to pay higher prices for contracts and services.” If these contract prices are high, electricity retailers then ultimately pass these on to consumers.