Bill shock: PM warned on energy prices

Malcolm Turnbull faces a crucial cabinet debate with a new warning against schemes that pass power costs on to households.

Prime Minister Malcolm Turnbull

Malcolm Turnbull faces a crucial cabinet debate today with a new warning from voters against schemes that pass hidden power costs on to households, with ­almost 60 per cent of Australians saying they will not pay a cent more for clean energy policies.

The warning, in a special Newspoll survey, comes as the consumer watchdog prepares to release extraordinary research today showing households are paying $103 every year on average for environmental schemes.

The Australian Competition & Consumer Commission will warn today of “unacceptable pressure” on households from the spike in energy prices, which have soared 43.7 per cent in a decade — an average increase of more than $500 per bill — as a result of network costs, retail margins and climate-change targets.

The conclusions highlight the challenge for Mr Turnbull and his cabinet colleagues as they meet in Canberra to decide on a new ­energy policy that is expected to emphasise reliable supply and ­affordable prices rather than cuts to greenhouse-gas emissions.

Dumping the idea of a clean energy target, the cabinet is ­expected to endorse a framework to scale back subsidies for renewable energy while encouraging ­investment in new power generators without hastening the closure of coal-fired power stations.

In a key test of the government backbench, Mr Turnbull aims to take the proposal to the Coalition partyroom tomorrow to endorse a strategy to address voter frustration over energy bills and attack Labor for setting renewable targets that will push costs higher.

Scott Morrison will release the ACCC findings today with a warning that there is “no silver bullet” to ease pressure on prices while pointing to government actions to fix the problem, such as preventing energy companies appealing against the Australian Energy Regulator when it blocks their price rises.

Voters are turning their backs on schemes that force consumers to foot the bill to encourage solar and wind power, adding to calls for renewable generators to “stand on their own two feet”.

The special Newspoll survey, conducted exclusively for The Australian, shows 58 per cent of voters do not want to pay anything more to encourage renewables while another 23 per cent say they are not prepared to pay more than $100 a year. The ACCC concludes that ­environmental programs already cost South Australians $116 a year in their electricity bills, compared to $97 more in NSW, $92 in Victoria and $134 in southeastern Queensland.

The cost of environmental schemes makes up 7 per cent of the $1524 average household electricity bill last year for those on the east-coast grid stretching from South Australia to Queensland.

The biggest share of the bill is the network cost, (48 per cent), followed by wholesale costs (22 per cent), retail costs (16 per cent) and retail margins (8 per cent).

Ringing the alarm on rising costs for consumers, the ACCC concludes the average household bill has risen to $1691 in the year to June and that this is 43.7 per cent higher than in 2008.

ACCC chairman Rod Sims said governments should make these payments “very clear” to consumers.

“If governments are having schemes that have cross-subsidies, make sure that’s all transparent and people know what they’re paying for, what they’re getting,’’ he said.

“I think the worst thing is when you have hidden cross-subsidies that nobody knows about.

“As long as governments are transparent, that’s fine, but we’ve got to be transparent about the various trade-offs involved.”

Breaking down the causes of the increase in household electricity bills, the ACCC estimates that 40 per cent of the price rise comes from network costs, 26 per cent from retail costs, 17 per cent from the cost of generation and 16 per cent from environmental policies.

The regulator’s findings clear the ground for a government campaign on energy prices this week, as Mr Turnbull and Energy Minister Josh Frydenberg seek to contrast their plan with Bill Shorten’s proposal to generate 50 per cent of the nation’s electricity from renewable sources by 2030.

The government has abandoned the clean energy target proposed by chief scientist Alan Finkel, amid warnings from Coalition backbenchers that the subsidies for solar and wind power, passed on to consumers through an emissions intensity scheme, would result in 42 per cent of electricity coming from renewable sources by 2030.

In another sign of a key contradiction at the heart of energy policy, the Newspoll shows 63 per cent of voters support subsidies for renewable power but do not accept paying those subsidies in increased electricity bills.

Asked if subsidies should continue, 59 per cent of Coalition voters say yes, compared to 75 per cent of Labor voters, 83 per cent of Greens supporters and 46 per cent of One Nation voters.

Asked whether they are willing to pay anything more for clean energy policies and renewables, 60 per cent of Coalition voters say no, compared to 54 per cent of Labor supporters, 31 per cent of Greens voters and 80 per cent of One Nation supporters.

The biggest environmental policies are the renewable energy target, which offers credits to solar and wind generators that are funded by electricity retailers and passed on to customers, and solar feed-in tariffs, which pay generous rates to households that produce solar power and pass the cost on to households that do not.

The ACCC report includes a warning against cross-subsidies that are largely hidden from consumers, hailing a Queensland government decision to fund the state’s solar bonus scheme out of the budget rather than passing the cost on to consumers.

Mr Sims noted that the ACCC’s role was to focus on affordability for consumers rather than sustainability, one of the other objectives for governments in energy policy.

Labor is yet to put a cost estimate on its ambition to generate half the nation’s electricity from renewables by 2030, a big step from the 23.5 per cent goal in the existing renewable energy target, which will be closed to new projects from 2020.

An impasse is certain in parliament as Labor energy spokesman Mark Butler says the opposition cannot accept a policy out of today’s cabinet meeting that rejects the clean energy target.

“What we’re very worried about ... is the increasing likelihood that Malcolm Turnbull is walking away from the clean energy target under pressure from Tony Abbott,” Mr Butler told ABC TV.

“If that’s what he does, then he won’t get the support of the Labor Party.”