Energy bills to spike before new policy brings savings
FAMILIES would save up to $550 a year on their power bills over the next decade under the Turnbull government's national energy policy plans, new modelling shows.
But in a further slap in the face to NSW consumers, the state will still suffer a spike in wholesale electricity prices because of AGL's insistence on closing the Liddell coal-fired power station in 2022.
The modelling, commissioned by the Energy Security Board, has been handed to state energy ministers ahead of their meeting with federal Energy Minister Josh Frydenberg in two weeks to hash out an agreement on the government's signature policy.
Declaring the "status quo in not an option", the ESB paper says the government's National Energy Guarantee (NEG) would be directly responsible for an average saving of $150 per year per household over the next decade.
It estimated a further saving of $400 per household would come from investment in subsidised green energy. Earlier modelling had put estimated NEG savings at $120 a year toward a total saving of $400.
Government sources described the latest modelling as a "good result".
Under the NEG, tough new reliability standards would force retailers and large electricity users to sign long-term contracts with dispatchable generators - typically coal, gas and pumped hydro - or invest directly in those sources to balance renewable supply.
Failure to comply would result in retailers such as AGL and Origin being forced to pay back costs associated with fixing their mistakes up to $100 million plus a fine of up to $10 million.
Despite an initial lowering of prices under the NEG, by the end of the decade household electricity bills were expected to be about the same as they are this year because of the closure of Queensland coal-fired power stations feeding the national grid.
"The closure of Liddell coal-fired power plant in NSW in 2022-23 puts some upward pressure on prices, in NSW in particular," the paper states.
It finds prices would rise as there was less power supply to meet demand, although the opening of Snowy 2.0 hydro power scheme in 2023-24 would help.
Investment in new generators would be supported by the reliability guarantee that would allow the Australian Energy Market Operator to play matchmaker between suppliers and retailers.