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Consumers face the Morrison-Taylor legacy: surging power prices

Consumers and small businesses in NSW, Queensland and South Australia face substantial electricity price rises after the Australian Energy Regulator (AER) revealed its final determination on default market offers today.

In a release strangely withheld until after the election, the AER announced:

  • NSW households will face increases of between 8.5% and 18.3%
  • South-east Queensland households will see increases of between 11.3% and 12.6%
  • South Australian households face increases of between 7.2% and 9.5%
  • Prices for NSW small businesses will rise 10%-19.7%
  • Businesses in south-east Queensland prices will be charged 12.8% more
  • South Australian businesses’ prices will be just above inflation (5.7%).

The Victoria Default Offer determination, released on Tuesday, has set a 4.5% average price rise in that state (which uses non-exported brown coal), but in some cases up to 10%.

As Crikey reported last week, NSW and south-east Queensland consumers are particularly vulnerable to the surging global thermal coal price, driven by the invasion of Ukraine, because they rely on black coal. But the unreliability of coal-fired power has also been a key factor:

… a reduction in thermal generation resulting from unplanned outages and higher coal and gas costs, slowing of investment in new capacity, and increasingly ‘peaky’ demand driving up the cost of hedging for retailers. These conditions have persisted and been compounded by the ongoing war in Ukraine, which has led to significant pressure on coal and gas prices globally; extreme weather in NSW and Queensland, which has affected coal supplies and electricity demand; and further unplanned outages at multiple generators. As a result, there have been very significant increases in wholesale futures prices for all DMO regions but in particular NSW and Queensland.

It’s now clear why Angus Taylor and Scott Morrison changed regulations to prevent the AER from revealing its determination during the election campaign — it would have smashed their claim that electricity prices had fallen under the Coalition, and reinforced Labor’s successful campaign to focus on the soaring cost of living.

It would also have highlighted the very real consequences for households and small businesses of the Morrison-Taylor agenda to keep the east coast power grid anchored to coal-fired power, with Taylor angrily attacking any suggestion expensive and unreliable coal should be phased out more rapidly, and of a lost decade in climate policy that commenced when Tony Abbott was elected in 2013.

The ensuing lack of a coherent energy policy, and the massive impact in deterring investment in renewables, has left the east coast poorly prepared for a sudden surge in fossil fuel prices.

Households — once promised a cut in electricity costs with the abolition of the carbon price in 2014 — face paying hundreds of dollars more a year because of the Coalition’s climate denialism.

Meanwhile, coal companies wallow in massive profits. Today NSW and Queensland coalminer New Hope revealed that in the three months to April it earned a pre-tax profit of $358.6 million for the quarter “following further strengthening of coal prices”, taking its nine-month pre-tax profit to a record $913 million.

Other coalminers such as Glencore (which settled corruption charges this week), Whitehaven and Chinese-owned Yancoal are also making huge windfall profits totalling billions of dollars.

Treasurer Jim Chalmers and Finance Minister Katy Gallagher must surely be considering a fossil fuel superprofits tax given the massive impacts on household and small business budgets in NSW, Queensland and South Australia.

For a long time, the impact of the federal Liberals’ inability to take climate seriously was thought to be on Australia’s emissions and our level of renewables investment. But now it’s set to have a very real impact on household budgets at a time of serious inflation. There’s speculation that Taylor will emerge as Treasury spokesman in a Dutton-led opposition. You can be sure that the government will make sure Taylor is held responsible for every single electricity price rise to come.