Energy prices to triple, says Origin chief

Archived News, Posted on 19 Apr 2010

ELECTRICITY prices across Australia were likely to triple over the next 10 years, Origin Energy chief executive Grant King warned yesterday.

Mr King told the Committee for the Economic Development of Australia in Sydney that a combination of the federal government's mandatory renewable-energy targets, energy policy uncertainty, higher electricity transmission and distribution costs, and higher fuel costs would drive the increase.

He said the boom in sales of energy-inefficient flat-screen televisions was also pushing up household energy use, despite the development of more energy-efficient household appliances such as fridges and dishwashers.
"The price of electricity is going to go up substantially," Mr King said.

"The cost of electricity transmission and distribution has historically been about 50 per cent of the cost of energy to consumers."

He said this would now go up to between 60 and 70 per cent of the total cost.
"We think that, by 2020, the cost of electricity will be threefold what it is today, given the current policy of large amounts of renewables being forced into the system, uncosted charges for those renewables given the current policy settings and a substantial increase in transmission and distribution costs.

"Fuel prices in Australia will also be repriced much more to international pricing levels."
Mr King said the latest news that electricity prices in NSW would be rising by about 64 per cent over the next three years was symptomatic of the changes ahead across the country.
He said the latest announced increases in NSW had been because prices in the state had been controlled for the past five years.

"The only reason that prices are not the same (across Australia) is because the various regulatory bodies are controlling prices, which is not good in a deregulated market," he said.
"If you put your hand on top of the genie, it will pop out somewhere else."
Mr King said the federal government would fall "well short" of its goal of cutting carbon emissions by 5 per cent by 2020, unless major policy changes were made.

He said he was concerned that politicians and policy-makers were "fatigued by the challenge" of introducing measures to cut back carbon emissions in Australia and would defer the issue into the next electoral cycle.