Cunningham: Territorians about to receive a small dose of pain caused by failed energy policies

It’s amazing how the more we invest in the “cheapest form of power”, the more the cost of that power goes up, writes Matt Cunningham.

Beetaloo Energy Australia’s Alex Underwood. Supplied

No policy area in this country devotes so much time to forecasts and predictions and so little to actual outcomes as energy.

Politicians and advocates have filled this space with talk of targets and modelling, then happily moved on to the next set of goals, even if the last lot have proved spectacularly inaccurate.

Here in the Territory the former government signed up to a 50 per cent renewable energy target by 2030, and held on to it long after it was clear the goal would never be achieved, and that attempting it would be frightfully expensive and pose a great threat to the reliability of our electricity grid.

Federal Labor produced modelling before the 2022 election predicting its ambitious renewable energy policies would see power bills cut by $275 by 2025.

By 2024 the Albanese government was implementing massive subsidies to try to disguise the fact bills had not fallen at all, and instead had risen sharply.

But this reality attracts far less airtime than whether a party will continue to commit to the fictional target of net zero by 2050.

The goal is always deemed more important than the result.

We saw this phenomenon recently when the NT’s CLP Government scrapped the 50 per cent renewable energy target.

Beetaloo Empire Energy At the Carpentaria-1 wellhead with former Minister for Mining and Industry Nicole Manison, Beetaloo Energy Managing Director Alex Underwood (centre) Kelvin Wuttke Beetaloo Energy’s site supervisor (right).

In making this decision, Deputy Chief Minister Gerard Maley said he had advice from his department that continuing to attempt to achieve this goal would cost about $5 billion.

The CLP subsequently released a report Labor had kept secret about the cost of achieving the 50 per cent renewable target.

Maley was then criticised because the report - written for Labor in 2018 by consultants Houston Kemp - had predicted cost increases more modest than the ones the minister had produced.

All of this misses the point.

The department’s $5 billion cost prediction is probably as inaccurate as every other guesstimate made in this space over the past two decades.

(Although it should be noted most of those predictions have greatly underestimated the actual cost of implementing renewable energy and rarely overstated it).

But comparing this prediction with the prediction from the Houston Kemp report is simply comparing fiction with fiction.

The real value comes from comparing prediction with fact.

Former Chief Minister Eva Lawler. Picture: Pema Tamang Pakhrin

As this column reported when we obtained a copy in 2021, the Houston Kemp report predicted the NT Government’s community service obligation (CSO) would increase by between $25 million and $29 million by 2030 under the 50 per cent renewable energy target, depending on the approach taken.

(The CSO is the amount Territory taxpayers give each year to Power and Water to subsidise the cost of electricity.)

Reality tells us that by 2025, the CSO had in-fact increased by more than $100 million.

Next financial year the CSO will hit $192 million, up from $80 million in 2017/18.

You read that right.

That’s about $752 for every man, woman and child in the Territory to shield them from the skyrocketing cost of electricity.

It’s amazing how the more we invest in the “cheapest form of power”, the more the cost of that power goes up.

The drastic increase in the CSO shows the Houston Kemp report greatly underestimated the actual rise in the cost of producing electricity.

Gerard Maley. Picture: Zizi Averill

Not all of this should be attributed to the renewables experiment.

The depletion of gas from ENI’s blacktip field - the primary source of energy for the Top End’s electricity system - has also proved costly.

The government has been forced to buy gas from Santos and Inpex, and at times rely on diesel to keep the lights on.

But we need to question whether the focus on renewables saw us take our eye off the ball here?

Would the previous government still have implemented a moratorium on the onshore gas industry if it had done proper contingency planning for the end of blacktip?

Territorians are about to receive a small dose of the pain caused by our failed energy policies. This week the CLP Government quietly scrapped Labor’s commitment to limit power price increases to CPI.

It had 192 million reasons to do this.

From July 1 power prices for domestic customers will rise by 3 per cent.

Large commercial customers face a far higher tariff, as do NT and Commonwealth agencies. Expect those costs to be passed on to consumers.

From January 1 next year, domestic customers who exceed 55kwh in a day will be charged a higher rate.

Who knows what the government will do beyond the next financial year, but few would be betting on power bills coming down.

Our one great hope is that Beetaloo Energy and Tamboran Resources begin producing gas from the Beetaloo Basin.

Former Labor Chief Minister Eva Lawler wisely signed domestic gas supply agreements with these companies last year.

Beetaloo Energy managing director Alex Underwood believes the first gas could flow within months.

If we want to avoid some serious bill shock, that’s one prediction we might hope will come true.

Originally published as Cunningham: Territorians about to receive a small dose of pain caused by failed energy policies