Higher prices cut consumption

THE ongoing political stoush about the carbon tax’s cost, purpose and repeal is having the unexpected benefit of reducing power consumption.

THE ongoing political stoush about the carbon tax’s cost, purpose and repeal is having the unexpected benefit of reducing power consumption.

Leading private sector energy consultant Hugh Saddler argues consumers have been curbing their enthusiasm for electricity since Tony Abbott won the Liberal leadership in late 2009 and united the Coalition against the carbon tax.

Data compiled by Saddler, principal energy consultant at Pitt & Sherry, shows dramatic cost-saving falls across the three years to 2013.

His figures show that the average household cut electricity use from $214 in Queensland to $346 in Western Australia, most probably at a faster rate since the tax arrived in 2012.

“When Barnaby Joyce started talking about the $100 roast, people then started thinking more about their electricity bills,” Saddler tells The Australian.

There are other factors in the fall of power usage, including the widespread introduction of more energy-efficient fridges.

But changing consumer behaviour has gone some way to offsetting the estimated 30 per cent hike in the cost of power caused by the tax and price rises by energy suppliers. Increases have been kept down to between 12 per cent and 14 per cent on average, he says.

Saddler’s research, based on work by the Australian Bureau of Statistics, reveals the carbon tax does not treat all states equally — and neither will its repeal.

His work shows it added between $138 and $159 to the average household electricity bill in Victoria, Queensland and NSW, $94 in South Australia and $55 in Western Australia, where the state government has kept a tight lid on power prices.

But as consumption falls the cost per kilowatt hour increases, and the pressure on power companies to keep hiking prices will only be greater.

Power consumption is not “going to turn around and start increasing again”, says Saddler. “But the big question is how much longer can cutting consumption go on for?”