No End In Sight: ‘Renewables’ Fixation Keeps Delivering Double-Digit Power Price Rises

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Any increase in dependence on intermittent wind and solar guarantees ever-increasing power prices. In Australia, that trend was set in 2010, following a massive expansion in the Federal government’s Renewable Energy Target, brought in under then Labor PM, Kevin Rudd.

The cost to consumers was always going to be colossal; what the energy boffins didn’t reckon on, was how colossal and how entrenched the trend would be.

As Australian householders and businesses brace for another round of double-digit percentage increases in their power bills, the characters responsible are engaged in the usual round of gobbledygook and blame-shifting. Apparently, if you look hard enough at the graphic above, you’ll see Vlad Putin’s fingerprints all over the decade-long surge in retail power prices. Maybe?

In the piece from The Australian below, the very same line gets a run by EnergyAustralia’s chief customer officer Mark Brownfield, as the explanation for retail power price increases of between 11% and 14%. Only the latest in a long line of double-digit increases suffered by hard-pressed Australian families and businesses.

In the piece that follows, Peter Smith mounts a credible case in defence of Vlad Putin, at least in so far as he’s accused of driving Australian power prices into orbit.

EnergyAustralia hits customers with double-digit price hikes
The Australian
Matt Bell
3 February 2023

EnergyAustralia household and small business customers in three states and one territory will be slugged with double-digit electricity price hikes, amid a “perfect storm” of inflationary pressures, the operator says.

In what will be a heavy blow for Australians dealing with three-decade high inflation and a looming ninth consecutive interest rate hike on Tuesday, the price rises due to come into effect from March 1 will see households pay over an extra $300 a year.

EnergyAustralia chief customer officer Mark Brownfield blamed the increases on a combination of coal supply shortages, wet weather and the ongoing war in Ukraine which had driven up wholesale prices.

From next month, Queensland users will pay 14.1 per cent or $301 per year more on average, while NSW has been hit with a 12.4 per cent or $276 per year increase.

South Australian customers faced a 10.9 per cent or $252 per year jump and in the ACT, prices would be upped 10.2 per cent.

“We know these price rises won’t be welcomed with households already experiencing cost of living pressures,” Mr Brownfield said.

“At the same time, we are continuing to work hard to introduce as much fuel and generation supply [STT takes it you don’t mean sunshine and breezes, then?] to the system as possible. We know increased supply of electricity helps avoid high wholesale costs, particularly at times of peak demand, and in turn this reduces pressure on retail electricity prices.” [So why keep shutting down perfectly reliable coal-fired plants?]

Small business customers will have smaller rises on a percentage basis, but larger in dollar terms. Queensland business owners will see a 12.5 per cent rise or about $641 per year, a 9.2 per cent or around $604 per year on average increase in the ACT and a 9.7 per cent or $522 per year hike in NSW. South Australia small business tariffs are due to rise by 9.7 per cent or $516 per year on average.

This followed the Albanese government’s intervention in the energy market with the introduction a price cap on coal and gas in December in a bid to lower power bills.

Treasury had warned last year that power prices would jump by 56 per cent in the next two years

It estimated that households would be $230 per year better off in 2023-24 under the price caps. The potential benefit was made on assumption by the government officials that prices will rise 23 per cent in the year ahead instead of 36 per cent without the measures.

“We acknowledge recent government intervention aimed at lowering the wholesale price of coal and gas over the medium term. We are working with governments and with coal and gas producers to implement these interventions to help minimise future impacts on retail prices for customers,” Mr Brownfield said.

Electricity prices were one of the biggest drivers behind a hotter-than-expected 7.8 per cent increase in inflation over the December quarter. The Australian Bureau of Statistics noted domestic holiday travel and accommodation was the main contributor, up 13.3 per cent, while electricity was second at 8.6 per cent.

The Australian Energy Regulator warned in November that energy prices would remain high for the next two years as wholesale gas prices doubled in the September quarter and electricity peaked at the second-highest level on record.

Its latest quarterly report for the September period showed electricity wholesale prices jumped to an average of $233 per megawatt hour across NSW, Victoria, Queensland, South Australia and Tasmania, more than triple the $66MWh average from 12 months ago.

Rising costs was hurting smaller electricity retailers juggle their exposure to high and volatile wholesale electricity prices and could lead to less competition and higher power bills, the Australian Competition and Consumer Commission said.

Most big energy users can manage their exposure to wholesale power price spikes by entering hedge contracts that lock in firm prices or signing up to contracts at a specified rate.

However, six electricity retailers have quit the market in 2022 and others have told customers to switch retailers or are no longer taking on new accounts.

Byron Bay junior electricity operator Enova Energy was one after it collapsed in June, with its chief executive slamming the “diabolical” state of the energy market as broken and unable to support small retailers amid soaring prices.

The Australian

Putin Can’t Hold a Candle to Our Own Energy Wreckers
Quadrant Online
Peter Smith
29 January 2023

My electricity usage for the latest quarter I have been billed, just a few days ago, was 14 percent less than for the same period last year. My bill was 21 percent higher. Simple arithmetic tells me that per kWh my charges have increased by about 25 percent in just one year. Much more to come, no doubt, if federal Treasury is half right and Chris Bowen, Matt Kean and Lily D’Ambrosio et al, continue their maniacal efforts to close down cheap coal power.

To be clear, mine is a single-person household; and, while distinctly unrich, I am not on my uppers. I can afford the bill. That might not be so easy for a struggling family or single mother with two or three children. Having their power bill increase by 25 percent might not be a small thing at all. Oh, it’s the war, the pollies in charge claim. Putin is to blame, not us. They’ll say anything to further their agenda. Not to put too fine a point on it, they’re liars to a man and woman.

For a reference point, Russia invaded Ukraine on February 24, 2022. Everything was hunky dory before then, apparently? Au contraire. I can do no better than cite the impartial ABC News, which reported on July 18, 2018:

Throughout the 1980s, ’90s, and most of the 2000s, electricity prices tracked fairly closely to general consumer price trends. In the past decade, however, electricity has shot off the charts. Since 2008 power prices have risen 117 per cent, more than four times the average price increase across sectors. There was only one brief reprieve in 2014 after the carbon tax was repealed, but that hip pocket relief was short-lived.

There’s a pointer in there to our current malaise. Hint: carbon (dioxide) taxes by other names. Tony Abbott (he whose name dare not be spoken in approbation on the ABC) gave us the reprieve in electricity prices to which the ABC refers. Another reprieve occurred in 2020 and 2021 during the authoritarian lockdowns of the hysterical COVID era; not sure why. However, electricity prices soared in the December quarter of last year. Is that down to Putin? That is the question. Maybe in some part, but it seems unlikely that he’s had more than a timing and transitory effect.

According to CPI figures, the index of electricity prices in the December quarter 2022, while spiking in the quarter, was only 3 percent higher than in the March quarter of 2020. So, in fact, the current level of electricity prices simply represents an extrapolation of an established trend. Ergo, the damage has been inflicted over numbers of years. More accurately, self-inflicted by closing down coal power, hobbling coal power and, in its stead, foisting intermittent and unreliable power onto the grid.

There is nothing unique about Australia. It’s happening wherever climate alarmists occupy government; principally in Europe and in North America. In Germany, for example, with its focus on green energy, household electricity prices rose 30 percent between 2011 and 2020 — almost three times the general increase in consumer prices. A study out of the University of Chicago shows that US states with a higher penetration of renewable power had correspondingly higher electricity prices. As the authors point out, the higher prices likely reflect costs that renewables impose on the generation system due to their “intermittency” and “higher transmission costs.” What a surprise.

Global spot prices for coal and gas did spike sharply as a result of the war. However, it’s hard to say by how much this affected electricity prices in Australia. Domestically, coal and gas are mainly sold on a contract basis which insulates domestic buyers from upward spikes in spot prices. Moreover, a good amount of coal power and the coal which fuels it is jointly owned. So that too would insulate Australian prices from global spikes. But look, no need to argue about that. International coal prices have dipped by 22 percent from their peak in September 2022. Natural gas prices are now back to their pre-war level. Ergo, if Putin was to blame, expect a commensurate dip in electricity prices. My advice: don’t hold your breath.

Finally, first close your eyes and engage in nostalgia. Recall the halcyon days of Australian energy generation. Coal power stations sitting on, or adjacent to, hundreds of years’ supply of high quality, easily extractable coal. Chugging away night and day without a moment’s interruption. Supplying households and industry with the cheapest power in the world. Second, open your eyes and face the awful reality of where we are now and where we’re heading.

Reliable and cheap power is giving way to countless far-flung wind and solar farms, most of which exist only in the febrile imaginings of energy ministers and which, in any event, don’t work when the wind isn’t blowing and the sun isn’t shining.

Firming, so-called, is being supposedly met with expensive batteries, which provide back-up measured only in minutes; with abundant pumped hydro which doesn’t exist and is never likely to, if Snowy 2.0 is any guide at all; with green hydrogen, which has never been produced at scale or, at any scale, at anything like an affordable price; with thousands of yet to be built concreted steel pylons carrying thousands upon thousands of kilometres of high-voltage cable criss-crossing the country to share power on the off chance the wind is blowing somewhere. And, according to the geniuses in government, federal and state, this mishmash of fanciful aspirations will actually be built and actually work and, to boot, provide the cheapest electricity. Explain that again Messrs Albanese and Bowen. Speak slowly.

Quadrant Online