Andrews insists renewable energy plan will tamp power prices

Premier Daniel Andrews says his plan to set up a state-controlled renewable energy company will push down power prices, after the federal budget predicted bills will soar by more than half in the next 18 months.

Figures released by the Bureau of Statistics on Wednesday confirmed what most households already know: their electricity and gas bills have been going up.

Melbourne consumers are paying more for gas.Credit: John Woudstra

Melbourne gas prices leapt 22.4 per cent over the year, compared with a national average increase of 16.6 per cent. Melbourne consumer electricity prices increased by 8.1 per cent over the year to September, well above the capital city average rise of 3.2 per cent.

According to Tuesday’s federal budget, more pain is in store. Treasury is predicting electricity prices will rise by 56 per cent over the next 18 months, while retail gas prices are tipped to lift by a total of 44 per cent this year and next.

The grim outlook for electricity prices follows a radical state election pitch last week by Labor to revive Victoria’s State Electricity Commission and spend an initial $1 billion to set up publicly controlled renewable energy, including offshore wind farms, with other investment expected to come from industry superannuation funds.

According to the CSIRO, it will cost more than twice as much to generate electricity in offshore wind farms as onshore wind farms in 2030, after factoring in construction costs.

On Wednesday, Andrews was adamant Labor’s plan to revive the State Electricity Commission would lead to lower prices, although he did not put a figure on it, nor say when lower prices might flow to consumers.

“Everyone knows if something is abundant, it will cost less, if something is very, very scarce, it will always cost more,” he said.

Andrews said the government was already supporting families through its $250 power-saving bonus, free kindergarten and solar rebates.

“There’s been a lot of talk about cost of living. But families are living this. Families are dealing with this every single day,” Andrews said. “I didn’t need a federal budget to convince me that we have to support families. We’ve done that every day of our term in office.”

While power prices are expected to rise rapidly, Australia appears to be getting off lightly compared with other countries. A recent report by the International Energy Agency found “deep uncertainties” over fossil fuel supplies and the global economic outlook had sent prices “skyrocketing” in Europe.

“Russia’s invasion of Ukraine shattered any hope of energy prices declining in the near term following the strong increases seen in the second half of 2021,” the report said.

Alex Payne-Billard, 33, an engineer who lives in Fitzroy in a home she bought three years ago, is worried about the impact of higher electricity prices, given the bill faced by her and her two housemates has already more than doubled in six months.

“It was $50 in February-March, and has since gone up to $120 in mid-October,” she said.

Fitzroy resident Alex Payne-Billard is worried electricity prices will continue to rise.Credit: Paul Jeffers

Payne-Billard can split the bills with her housemates, but says they have all had to cut back on other spending.

“We’ve all noticed how it’s gone up significantly, and we’re cutting back on going out, or eating meals in more frequently, not using UberEats as much.”

The sentiment was shared by Nick Yannas, who runs two hairdressing salons in Melbourne’s south, employing about 20 people.

He says there are hard limits for what businesses can do to reduce their energy costs.

Salon owner Nick Yannas pays about $300 in energy bills each month.

“I can’t turn things off, I can’t lower consumption. I need the lights on for a certain time,” he said.

For one salon, Yannas pays about $300 in energy bills each month, which includes air-conditioning, lights and running hairdressing equipment. He says these are non-negotiable, in contrast to households trying to turn off the lights.

On Friday, the state opposition leapt on the federal budget prediction of rising power bills as evidence that Labor’s energy policy was “in tatters”.

Opposition energy spokesman David Southwick said the solution was to get more domestically produced onshore gas into the system to drive down prices.

But he stopped short of committing to lower energy prices, saying it was clear “that’s not the case in terms of where things are at right now”.

With Rachel Eddie

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