By Nick Toscano and Mike Foley
Household electricity bills are set to jump by as much as $200 a year in parts of the eastern states, raising cost-of-living pain and turning the upcoming election into a referendum on Australia’s shift to clean energy and the impending closures of coal-fired power stations.
Energy regulators released draft decisions on Thursday to lift price caps for hundreds of thousands of customers by up to 8.9 per cent in NSW and up to 5 per cent – or $68 – in parts of Victoria.
Sharp increases in power prices have intensified cost-of-living pressures in Australia in recent years.Credit: Paul Jones
The changes to the so-called default offers – the maximum prices retailers can charge customers on standing power plans – were attributed to higher costs in the grid in the past year amid breakdowns at coal-fired power plants, elevated fossil fuel prices, rising infrastructure costs and stretches of low wind.
The news set off a furious political debate in Canberra, as the Albanese government and the Coalition head to the federal election with competing plans for the future of the electricity grid.
Opposition Leader Peter Dutton is campaigning to cut short Australia’s renewable energy rollout target and build a fleet of government-owned nuclear generators across the mainland if the Coalition wins this year’s election, starting with two plants in 2037 and reaching seven by 2050.
Dutton attacked the government over the incoming price hikes on Thursday, demanding Albanese sack Energy Minister Chris Bowen and declaring that the “government’s renewables-only energy policy is a disaster”.
The Albanese government has targeted doubling the share of renewables to 82 per cent by 2030 and follows the advice of the Australian Energy Market Operator.
Labor and the Coalition are united on the ongoing need for gas-fired power stations to bolster the grid, either when coal plants break down or at times of low wind and sunlight. The energy grid operator has said 26 new gas plants are needed by 2050. Neither party, however, has detailed plans to achieve this.
Bowen on Thursday said power prices were being driven higher by ageing coal-fired power stations, which had become increasingly expensive to operate and were breaking down more often.
Sudden plant outages were leaving the market undersupplied with zero notice, he said, forcing expensive gas-powered generators to ramp up to plug the gaps, and driving volatile swings in wholesale prices.
“We’ve seen energy price spikes right around the world since [2022],” Bowen said. “But what hasn’t changed is the fact that every bit of renewable energy you introduce puts downward pressure on prices, and if you are planning on keeping coal in the grid for longer that puts upward pressure on prices.”
Prime Minister Anthony Albanese promised at the 2022 election to cut power bills by $275 by 2025 under his plan to expand renewable energy to 82 per cent of the grid by 2030.
However, bills have risen by up to $400 for some residents in NSW and up to $250 for some Victorians since he was elected, largely due to the fallout of a global energy crunch raising the prices of coal and gas.
Wholesale power prices were also driven up last year after a prolonged stretch of cold weather coincided with a wind power drought, creating a temporary spike that flowed to this year’s bill hikes.
Albanese will rely on an expected third round of power bill subsidies in the federal budget on March 25 to quell voter anger.
The price rises announced on Thursday will increase default offers by between 2.5 per cent and 8.9 per cent across most of the east coast. In Victoria, which sets its own offers, prices will remain “relatively flat”, ranging from a cut of $19 to an increase of $68 depending on the region.
Dutton has criticised the government’s pro-renewables energy policy and said a “balanced energy mix”, including nuclear power, was needed. He claims the Coalition’s nuclear policy would deliver 44 per cent cheaper electricity bills by 2050.
However, many industry leaders, experts and top energy officials reject that claim, cautioning nuclear is a “comparatively expensive” power source. The CSIRO and the market operator say nuclear power will not lead to lower energy bills, and have calculated that a grid dominated by renewables and backed up by gas would be significantly cheaper.
There are also concerns about keeping coal-fired generators in the grid until nuclear facilities are operating, with utility companies warning their ageing plants cannot continue running long enough without reliability risks and volatile prices.
Australian Energy Regulator chair Clare Savage on Thursday said accelerating investment in renewables, storage, transmission and gas plants was the best way to restrain energy prices.
Explaining some of the drivers behind this year’s default electricity price rises, Savage said unplanned outages at coal-fired power stations had played a major role.
“[Coal plants] are ageing, they are not being maintained, and they are falling over unexpectedly,” she said.
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