Welfare body welcomes Liberal plan to cut power prices as others warn reform will be needed

THE Liberal Government’s plan to sever Tasmania’s ties with National Electricity Market is a big win for household and business power prices — but more reform is needed to further reduce costs, energy analyst Marc White says.

Minister Guy Barnett. Picture: LUKE BOWDEN

TASMANIANS have been promised electricity price cuts of up to 10 per cent under a Liberal policy to pull out of the National Electricity Market.

Premier Will Hodgman and Energy Minister Guy Barnett have announced plans to sever ties with the NEM in a bid to achieve cheaper energy for households and businesses and ultimately re-sell power back to the national wholesale market at higher prices.

Mr Barnett said breaking the NEM link was key for Tasmania to reach the lowest prices in the nation by 2022.

“By de-linking from inflated mainland electricity prices in the National Electricity Market we can once again make our low-cost ... on-island generation work for Tasmanians,” he said.

“[We can] ensure they are no longer exposed to higher costs due to power station closures or system failures on the mainland.”

Prior to the establishment of the new system in 2021, prices for regulated customers will be capped at the Consumer Price Index.

Premier Will Hodgman said the change would not mean a physical disconnection from the NEM with a potential second Basslink interconnector still in the pipeline.

Energy costs were identified as a key issue in the Mercury’s recent Tasmania 2022 readers’ survey with 46.89 per cent of respondents saying it had a very important effect on their cost of living.

The move has been welcomed by the state’s peak welfare body with TasCOSS chief Kym Goodes saying it would ensure Tasmanians were protected from the current price shocks being experienced nationally.

“To be fully realised, the announcement will require a complex transition, careful planning and implementation,” she said.

Independent energy analyst Marc White, of Goanna Energy said in the short term, 238,000 homes and 37,000 business would be protected from interstate price rises, estimated at $120 million for Tasmania in 2017-18.

“It’s good for houses and businesses over the next couple of years, but in the long term we’d still like to have seen more reform in the energy industry in Tasmania,” Mr White said.

He said Hydro Tasmania needed to be broken up into competing businesses to generate competitive prices.

“The government keep reinforcing the [Hydro] monopoly by continuing to intervene in [electricity] prices.”

Mr Barnett said when the Labor-Green Government joined the NEM in 2013 it linked Tasmania’s wholesale prices with the mainland rates, which had seen volatility in prices.

Mr Barnett said a Labor government would liaise with government business enterprises to implement pricing mechanisms.

Labor energy minister Scott Bacon said the Liberals must immediately release Treasury information on Tasmania being linked to the Victorian wholesale price.

“Labor supports decoupling from the Victorian wholesale price but it has to be backed by a plan and an alternative model,” he said.

“What will this mean for the business case for a second Bass Strait Interconnector? Will this have implications for investment in major wind farms in Tasmania? “What does it mean for plans to make Tasmania the battery of the nation?”

Mr White said the state was still a while away from becoming the energy “Battery of the Nation” through pumped hydro and wind farm technology. Greens MP Rosalie Woodruff said it was important to see the impact of independent power prices as it moved into a political space.

The latest policy comes after the Liberals announced on Saturday that 79 Momentum Energy jobs would be relocated from Melbourne to Tasmania if they were re-elected.

State-owned Momentum Energy’s call centre operations are currently based in Melbourne despite being owned by Hydro Tasmania since 2009.

“A Government-owned business should have its call centre operations in Tasmania providing jobs for Tasmanians, and we will ensure that Momentum Energy’s 79 call centre jobs are brought home, where they belong,” said Mr Barnett.