'Volatile' Australia Electricity Market Concern

subscribe

THE cost of electricity under the carbon price could rise further than the 10 per cent forecast by the government if major greenhouse emitters are made to pay unpredictable ''top-up fees'' on international permits, the power industry has warned.

As the government nuts out detail on the carbon price, to be introduced in July, power generators fear that uncertainty about carbon costs will interfere with the cut-price long-term deals they strike with electricity retailers, who keep the price of power down by making forward contracts of three years or more with power generators. Otherwise, retailers have to buy power on the spot market, which is considerably more expensive.

But under some options being canvassed by the government, power generators would have difficulty predicting their future carbon costs because of complex ''top-up fees'' on international permits, in turn making it impossible to make forward contracts.

This ''could increase volatility in the electricity market and further increase electricity prices'', the Energy Supply Association of Australia has warned in a submission to government.

Modelling commissioned by the association found that a 5 per cent fall in contracting in the National Electricity Market could lead to a 10 per cent rise in retail electricity prices for households and 15 per cent for large users. Treasury's modelling on the cost of the tax has estimated electricity prices will rise by about 10 per cent.

A spokesman for Climate Change Minister Greg Combet said loans would be available to eligible electricity generators to buy future carbon permits.

Related News

ALBERTA EV

How Alberta’s lithium-laced oil fields can fuel the electric vehicle revolution

CALGARY - After a most difficult several months, Canadians are cautiously emerging from their COVID-19 isolation and confronting a struggling economy.
There’s a growing consensus that we need to build back better from COVID-19. Instead of shoring up the old economy as we did following the 2008 financial crisis, we need to make strategic investments today that will prepare Canada for tomorrow’s economy.

Tomorrow’s energy system will look very different from today’s — and that tomorrow is coming quickly. The assets of today’s energy economy can help build and launch the new industries required for a low-carbon future. And…

READ MORE
largest-off-grid-solar-plant

Rio Tinto Completes Largest Off-Grid Solar Plant in Canada's Northwest Territories

READ MORE

gulf power

Gulf Power to Provide One-Time Bill Decrease of 40%

READ MORE

IEA warns fall in global energy investment may lead to shortages

READ MORE

ev cost trend

GM president: Electric cars won't go mainstream until we fix these problems

READ MORE