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Palmer’s populist carbon tax ploy won’t cut power bills

If you heard Clive Palmer and his Palmer United senators say today that they will only scrap the carbon tax with stronger rules to protect consumers, you might have thought they sounded quite fair and…

In the media spotlight: Palmer United Party leader Clive Palmer outside the Senate chamber at Parliament House this week. Lukas Coch/AAP

If you heard Clive Palmer and his Palmer United senators say today that they will only scrap the carbon tax with stronger rules to protect consumers, you might have thought they sounded quite fair and reasonable. Actually, it’s populist hokum.

And if you’re expecting to see your power bills go down when the carbon tax is eventually repealed, rather than keep rising, get ready to be disappointed.

Standing up for consumers?

In a chaotic day in Parliament, the Senate has defeated the government’s carbon tax repeal. That came after Palmer surprised everyone at a media conference earlier in the morning by claiming he and his senators had been “double-crossed” by the Coalition over amendments to ensure carbon tax savings are passed on in full to Australian families and businesses.

Palmer United Senator Glenn Lazarus declared this week that his party’s “historic” amendment would:

deliver a toughened obligation for suppliers of electricity, natural gas and synthetic greenhouse gases to pass on all cost savings resulting from the carbon tax repeal; it also requires suppliers to clearly explain to the ACCC [Australian Competition and Consumer Commission] and customers the way in which cost savings have been calculated and passed on to consumers.

But are the Palmer United amendments really necessary? And will you save money on your power bills thanks to their proposed changes? On both counts, from what I’ve seen the answer is no.

Instead, it looks more like making sure that when the carbon tax is eventually repealed, the Palmer United Party can gain credit for what is already included in the legislation.

First, the carbon tax repeal legislation already covers Australian Competition and Consumer Commission monitoring on prices after the carbon tax repeal. As the Explanatory Memorandum states:

The ACCC will have new powers to monitor prices and take action against businesses that attempt to exploit other businesses and consumers by charging unreasonably high prices or making false or misleading claims about the effect of the carbon tax repeal on prices.

So at best the PUP’s “historic amendment” is adding some detail to obligations that are already in the legislation.

However, even these obligations are unnecessary. To see this, it is important to know how electricity prices are set.

Understanding your power bills

Roughly speaking, retail electricity prices paid by households are either set by a regulator or are set by the market. As the Australian Energy Regulator notes:

In Queensland, New South Wales, the ACT and Tasmania, you can ask for a contract with a regulated electricity price.

When the carbon tax is repealed, these regulated prices will be adjusted for the reduction in cost. However, this may not occur immediately. It will depend on the regulatory process. The prices will be changed at the next “reset” unless the regulator made provision for the potential removal of the carbon tax the last time it set the prices.

So there is little point in having either the ACCC monitor this process or electricity retailers explain it. Any delay depends on the regulators, not “business exploitation”.

Alternatively, large business customers and households in Victoria and South Australia do not have regulated tariffs but rely on retail competition. But even for these unregulated tariffs, the ACCC monitoring is unlikely to make a real difference.

Electricity retailers buy their power in two ways. They can either buy on the spot market or through “forward” contracts with generators.

The spot prices are arguably the most transparent prices in Australia. But they are also some of the most volatile and can vary between a negative price and a price up to almost $13,000 per megawatt hour. The relatively small change due to the repeal of the carbon tax will be swamped by the normal volatility of power prices in the short term. So even if the ACCC wanted to check the effect, it is not going to be able to do so.

The contracts between retailers and generators will have the carbon price built in. And, when they are renegotiated, the effect of the carbon price will be removed. But that will not be instantaneous. Once this occurs, competition will pass the price fall onto customers. And if you think your electricity retailer is not acting fast enough, then shop around. There are plenty of retailers out there.

So the PUP amendment, and ACCC price monitoring more generally, is an attempt by politicians to claim credit for changes that will happen anyway.

However, these attempts are not without cost.

Why your bills are really rising

Electricity prices are rising, but that’s mainly due to changing demand for network assets.

Network prices have risen rapidly over the past few years. For example, in New South Wales average annual power bills more than doubled between 2007-08 and 2013-14, soaring from A$1013 to A$2073, with A$580 or more than half of that rise due to increased costs for the network of poles and wires. In comparison, the carbon tax added A$172. And as the Australian Financial Review reported today, the state-owned NSW network companies are seeking further price rises.

In part these price increases reflect falling demand for network assets. The networks have fixed costs and as consumers buy less power through the network, the cost per unit of power goes up. This feedback loop – from falling demand to higher prices to even further reductions in demand – has been called a “death spiral”.

While the repeal of the carbon tax may be political theatre, it simply distracts attention from the real problems facing Australia’s electricity networks.

With electricity prices set to keep rising after the carbon tax is repealed, due to factors that have nothing to do with the carbon tax, the ACCC will face a lot of pressure to find a culprit to blame. Hopefully, the regulator will stand its ground. But it may also be tempted to find a scapegoat. In that case, watch out if you are an electricity retailer. Unless every ‘i’ is dotted and every ’t' is crossed, you may be “named and shamed”, destroying significant business value.

But of course, this just creates an implicit regulatory burden. And eventually that will also be reflected in the price households pay for their electricity.

So if you are expecting the repeal of the carbon tax to lead to lower power prices, don’t hold your breath.

* Editor’s note: This article was updated at 6:30pm to fix a broken link and add more detail on price rises in NSW, as asked for by readers.

Join the conversation

104 Comments sorted by

    1. David Stein

      Businessman

      In reply to Peter Ormonde

      Indeed Peter. Tony guaranteed that every voter's power bill would go down by $550.
      I encourage every voter to figure out how they are going to spend that money. Weekend away? New watch? Dinner out at a new restaurant?
      Keep all those good times in mind when the bill comes in and the actual 'savings' can be measured.
      But what is this Mr Stephen King saying? That bills might not go down by $550? No no no. Wrong. As you say Peter. It's written in blood.

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    2. In reply to Trevor Kerr

      Comment removed by moderator.

    3. Tony Pfitzner

      Consultant

      In reply to Peter Ormonde

      Don't bust the insulators Peter. My power bill has paid for them bloody insulators, and now you're taking pot shots at em.

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    4. Ross Barrell

      Aikido Student

      In reply to Peter Ormonde

      "the repeal of the carbon tax may be political theatre"

      So when are the pundits going to work out that this is all smoke and mirrors? And how will they respond when the penny finally drops?

      It will be a nice piece of amusing theatre when folks work out that their power bills aren't dropping and that the demise of the so-called carbon tax (aka the CO2 emissions levy) has no effect of the price of electricity.

      I find it hard to understand how so many people could be so taken in by such a transparent deceit. Go figure.

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    5. Jane Middlemist

      citizen

      In reply to Ross Barrell

      About: "when folks work out that their power bills aren't dropping" - in fact Ross, we received a letter from AGL last week assuring us that our power bills will go up from the July 1. The letter explained:
      "A variety of factors contribute to gas and electricity rate changes. However, as one of the largest Australian-owned energy retailers we are committed to keeping our rates competitive."
      So - nothing to worry about. They probably forgot to mention the $550 savings but I'm sure we can trust them to pass it on …

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    6. Garry Baker

      researcher

      In reply to Peter Ormonde

      He certainly did make that promise - $550 reduction in power bills would be the norm, if only he got his way with tossing out the carbon tax.

      Nowadays folks remember these things, so a promise is a promise Mr Abbott, and to reneg on it would be hazardous

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    7. David Stein

      Businessman

      In reply to Jane Middlemist

      What's the coalition's plan Jane? Far be it for me to come up with a way for them to wriggle out of their predicament, but is there any way out for Abbott when power bills do not go down by the mythical $550?
      I really can't see any exit strategy. If Tony Abbott was successful at anything it was searing the idea that carbon tax = higher power bills in the minds of voters.
      Higher power bills will be electoral poison.

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    8. Ross Barrell

      Aikido Student

      In reply to David Stein

      "Higher power bills will be electoral poison."

      And a good thing, too! Can't wait to see it all happen.

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    9. Jane Middlemist

      citizen

      In reply to David Stein

      Also David, if as warned by my gas and electricity provider, prices go up in August after the tax is repealed in July, won't some customers think that the repeal - in July - "caused" the price hike a month later?
      Difficult to "clarify" for Daily Telegraph readers, I think.

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    10. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Jane Middlemist

      Morning Ms Jane ...A couple of weeks back I received a lovely letter from AGL who send me electricity over the incredibly well manicured poles and wires. It was written in 3 point italic type ... this always triggers my interest.

      After spending the best part of an hour decoding it I realised that my power price was actually being reduced! Yes - reduced. Good news!!! In three point type ??? Hardly shouting it from the roof-tops then.

      Reading further I discovered the reason for the microdot…

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    11. Susan Nolan

      retired

      In reply to David Stein

      Oh David,

      I expect the coalition will blame that ALP and those Greens and probably, even, the previous ALP/Green Government.

      Tony behaves like a little kid - everything is their fault, nothing is his fault. All his lies are their fault and what lies anyhow. Then there are all his imaginary bits and pieces. It'll be that imaginary debt-and-deficit-disaster they're always talking about. That'll be why he lied about our $550.

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    12. David Stein

      Businessman

      In reply to Susan Nolan

      I'm having a little fun with the $550 Susan since there's no way that anyone's bill will be going down by $550. If anything, it will be an offset to an increase, but as Jane says, try telling a 'Tele reader that!

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    13. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Jane Middlemist

      Some things are worth saying twice Ms J ... technology understands this ... even if at first we ourselves are uncertain.

      Speaking of saying things multiple times... you might have witnessed the gormless Hunt being absolutely convinced (if less than convincing) that the Government was fully behind the PUP amendments ... all three of them ... whatever it takes to get that dreadful wrecking ball tax to stop throttling us in our sleep ...

      You might have heard Our Beloved Leader saying this morning…

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    14. Susan Nolan

      retired

      In reply to Jane Middlemist

      Thanks for that info on Palmer and Windsor, Jane. That's the first hopeful thing I've heard in ages.

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    15. Susan Nolan

      retired

      In reply to Peter Ormonde

      Hi Peter,

      Clive is certainly a cunning customer - probably a dodgy one too - but he's running rings around the Government at the moment.

      First he has talks with the coalition and tells them what the amendments are that he wants.

      The say: Right-ho, Clive baby, whatever you want, if you just vote for our Repeal Bill.

      But Clive does not draft the amendments and put them up himself whilst the Repeal Bill is in the House. Probably says: no time - since you left agreeing with me so late, government…

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    16. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Susan Nolan

      Poor Tony ... he has a real credibility problem doesn't he? No one seems to take him at his word. Lord knows why. Tony is such an agreeable bloke that he agrees with whoever he's speaking to at the time... a conviction politician who passionately believes in whatever he thinks you want to hear.

      We used to call them bean-bag politicians ... that dates me doesn't it? - Lord I hope so, dreadful contraptions. They always carry the impression of the last arse that sat on them.

      Given that Clive…

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    17. Jane Middlemist

      citizen

      In reply to Peter Ormonde

      I'm back Mr O. Yes I heard Mr Abbott rudely patronising the new senators. If I were he, I would not tangle too often with Ms Lambie. My letter a bit different, didn't need my specs: 3 pages: Page 1 is notification of price rises (gas and electricities), P.2, compares current fees with new fees. Also includes info that there is a difference between retail and market contract, and P3. compares current and new electricity rates. P2 tells me that we have a 'market' contract. Do you know which is better "market" or "retail" contract? I don't usually read these things & didn't even know there were two options.

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    18. Jane Middlemist

      citizen

      In reply to Jane Middlemist

      Sorry Mr O, page two compares only gas prices, current and new.
      Page 3 compares only electricity prices. Both have the other info I mentioned interspersed confusingly with the comparison tables.

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    19. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Jane Middlemist

      Well that's a totally different letter to mine Ms Jane and I wouldn't hazard a guess given the tangled complexity of these marketing types.

      But I did just have a squizz at the IPART website and discovered that as from July 1 2014, NSW retail power prices have been deregulated.
      http://www.ipart.nsw.gov.au/Home/Industries/Electricity/Reviews/Retail_Pricing

      Now if we actually had something like a market in such things, and we are apparently producing more power than anyone wants - you'd expect that…

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    20. Jane Middlemist

      citizen

      In reply to Peter Ormonde

      Phew!
      I've had a good look around Mr O. The most outstanding thing I came across was that energy prices will be "deregulated" (not sure what that means but it sounds ominous) from this month.
      Anyway, I feel guilty about you taking so much trouble but thank you. I'm going to wait and see what happens; and will also ring AGL and ask for more explanations. Our contract, if any, has been with them for years and if signed it would have been with my better half who can't remember anything about it!
      Cattily, I sort of hope all the prices go up after the carbon tax repeal thus exposing the whoppers told by the government.
      Plenty of entertainment in politics at the moment but I won't believe any good news until / if it happens. . Thanks again.

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    21. Terry Reynolds

      Financial and political strategist

      In reply to David Stein

      The ABC Fact Check said that at a fixed 25% Carbon tax we are paying around $500 per annum extra on our bills this year and that was to drop to a fixed 12.5% of $250 when the EMS came in in 2015/16. Somebody is "bullshitting" us!

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    22. Eric Thacker

      Viticultural Contractor

      In reply to Peter Ormonde

      I seem to recall during Question Time when Julia Gillard was PM, Abbott and many other LNP members brandishing power bills from small businesses claiming they were paying thousands of extra dollars as a result of the carbon tax. Maybe it is time for ALP members to start asking Abbott and Hunt if these businesses will now be compensated for this, and if not, why not.

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    23. Greg North

      Retired Engineer

      In reply to Peter Ormonde

      " But now you're saying it ain't as simple as we simple folks understand - or believe... or what we were told. I'm shattered. "
      Well, you've said it and so just keep up with the polishing.
      You may even see some reflection of the article in indicating that there are other factors in your power bill.
      Meanwhile, some less simple folk may well appreciate that those other factors could cause an even greater increase if nothing is done about the Carbon Tax, thanks to the Puppetry of course.

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    24. Greg North

      Retired Engineer

      In reply to Ross Barrell

      Ross, there is enough theatre about on theatres without needing to add more and you would be better to focus on facts.

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    25. Greg North

      Retired Engineer

      In reply to Jane Middlemist

      Of course Jane, you cannot expect any organisation to make commitments about an unknown unknown and that is what we have from the Clive Rumsfeld school of Puppetry, strings even being pulled from across a big ditch it seems.
      There is something called legislation Jane and folks can expect absolutely nothing whilst they applaud Labor and Green blockers the new Personas No.

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    26. Greg North

      Retired Engineer

      In reply to Garry Baker

      And Garry, research might even show that the $550 is what could be expected for an average power bill effect of no Carbon Tax and it has never been stated that there are not other factors.
      It does appear that some people need to do some arithmetic as in if say a $3000 average power bill is to go up by say $500 for whatever reasons other than Carbon Tax and that a removal of the Carbon Tax would cause a drop of $550 on an average bill then instead of paying $3500, an average payer could expect to be paying $2950.
      That certainly is not a drop of $550 on what an old bill was but just as certainly is a $550 drop on $3500.
      Not so hard to do such sums is it?

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    27. Greg North

      Retired Engineer

      In reply to David Stein

      Well David, anybody does know that it is not just the Carbon Tax that is affecting bills.
      You do know that do you and if not see my answer to Garry Baker above.
      No wriggling, no exit strategy and just the truth even if that is not so perceivable for more than a few.

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    28. Greg North

      Retired Engineer

      In reply to Ross Barrell

      If you are pining for good ol watermelon days Ross, you will get plenty of poison happening or would you prefer the leadership blood letting scenes?

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    29. Greg North

      Retired Engineer

      In reply to Jane Middlemist

      Yes Jane, there could be some customers who have difficulty in making comprehensive assessments and if they read TC comments, thety could be even more confused.

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    30. David Stein

      Businessman

      In reply to Greg North

      Greg, you are making the precise point. Cheap three word slogans tend to come rather unstuck when messy detail gets in the way.
      Likewise, creating an impression, then attempting to fall back on tricky language is a recipe for voter backlash. The clear impression was put in voters minds - your power bill has gone up because of the carbon tax. There was never a qualifier about poles and wires from Tony Abbott.
      It was always going to come unstuck - when power bills do not go down voters will feel…

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    31. Garry Baker

      researcher

      In reply to Greg North

      Agree with all you say Greg. Abbott bandied his numbers around as if all and sundry were in for a great present when he took charge. Thus some mirth in tossing 'his' own numbers back in the public sphere.. Whereas the plain fact is energy prices have gone through the roof because of the cartels now running the game... Indeed, the fix is in, and Abbott chooses to ignore it

      Australian consumers serve as ATM's for these money hungry gluttons, yet governments fail to look at the structure of how retail prices are determined - let alone their massive profits offshored back to head office. Largely free of tax as well, given that multi nationals are free to pay whatever they like here.

      The fix is in ... have a read
      http://www.adelaidenow.com.au/news/opinion/bruce-dinham-former-etsa-boss-says-were-all-being-ripped-off-on-electricity-prices/story-fni6unxq-1226676683356

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    32. Alen Talic

      logged in via email @hotmail.com

      In reply to Ron Bowden

      Now this is one of the best ideas I have heard in some time -"penalties for lying to the public the same as for lying to parliament?"

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    33. Greg North

      Retired Engineer

      In reply to David Stein

      Well a lot of people will realise that it is nothing to do with three word slogans David for they do just give a heading to an issue and as for
      " when power bills do not go down voters will feel duped. "
      I do think that you really underestimate the intelligence of voters.
      Why is it that a few people on a forum do clutch at straws anyway?

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    34. Greg North

      Retired Engineer

      In reply to Garry Baker

      I recall having seen that article by dinham put up on other occasions Garry, Dinham making an appropriate din for what he sees as issues even if his article hardly covers the full realities.
      For starters, ownerships do vary state by state.
      Perhaps as a former boss he may have an axe to grind, not that there would not be a person who would like to see electricity bills not as they are.
      One reality is that we have had electrical authorities doing predictions about growth and infrastructure being developed and you do not get that done over a weekend but it is an ongoing process where you do have to start planning developments years in advance or otherwise it is possible that many people could be without adequate power supplies if growth had grown as predicted and a decision was taken because someone said what if demand does not arise.

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    35. Ron Bowden

      Entropy tragic

      In reply to Alen Talic

      It would be lovely Alen, if only it could be made to work.
      Who would legislate it, much less police it?

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    1. Georgina Byrne
      Georgina Byrne is a Friend of The Conversation.

      Farmer at Farming

      In reply to Sarah Glass

      But fossil fuel companies are lovely! They really care about people and always do the right thing. Haven't you seen the pretty ads for Chevron on SBS, Sarah? Power companies are doubtless the same and bend over backwards to help people, in spite of all those beastly selfish ones who've put solar panels on their roofs!

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    2. Garry Baker

      researcher

      In reply to Sarah Glass

      double crossed isn't even the half of it Sarah. . . John Howard locked in a 25 year gas contract with China at a fixed price for 25 years.... US$3 per Mmbtu

      Currently gas is running at $11 to $12 on global markets ... yet Howard's price (for 25 years) allows the Chinese recipients to fill up a 100 litre fuel tank in a 4WD for around $6 ... That is, on a barrel of oil energy equivalent. .. Not bad, one could support a gas guzzling 4wd for a lifetime at these prices,

      Almost none of our offshore oil is being used for the benefit of Australians ... "Once ever crops", drilled out and shipped to offshore destinations by multi national oil players

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    3. Sarah Glass
      Sarah Glass is a Friend of The Conversation.

      Retired scientist/technologist

      In reply to Sarah Glass

      I read this is a UN paper on world decarbonisation today, the link is below as well, but it is a huge document, but an interesting piece on Australia included this statement:

      "The potential for generating energy from renewable resources in Australia is far greater than Australia’s total energy use today.11 As such, the challenge for Australia is not the availability of renewable resources, but harnessing the potential."

      http://unsdsn.org/wp-content/uploads/2014/07/DDPP_interim_2014_report.pdf

      We could be benefiting from this if only we have an effective government, governing for the benefit of Australians.

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    4. Greg North

      Retired Engineer

      In reply to Sarah Glass

      Sarah, decisions have been made by some state governments to sell their power generation, distribution and retailing assets and in doing that type of thing, there will always be safeguards involved, one being for the new owner if you like to call a guarantee of income that.
      If there was not a guaranteed income and a new owner was making losses, they could well decide to close down what is an essential public service or sell it off to some other shoddy organisation.
      On the other hand, a government…

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  1. Ben Marshall
    Ben Marshall is a Friend of The Conversation.

    Writer

    Thanks for this, Stephen.

    Question without notice: how much does the current 'carbon tax' cost Palmer's bottom line? A lot? Not much?

    If it costs him a lot, then isn't it reasonable to call him to account for the conflict of interest?

    Cheers.

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    1. Pete Beaumont

      logged in via email @mac.com

      In reply to Ben Marshall

      Didn't Mr Palmer abstain from the vote in the house of reps for the carbon tax repeal legislation ?

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    2. Susan Nolan

      retired

      In reply to Ben Marshall

      Didn't think he paid it, Ben. He may have, though. I think I remember that, initially at least, he was trying to get the repeal of the carbon tax back-dated.

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  2. John Zigar

    Engineer, researcher

    "Electricity prices are rising, not due to the carbon tax, but due to changing demand for network assets".

    Hang on, I clearly remember an electricity bill last year saying that the price of electricity for the year had gone up by $300 or $400 due to the carbon tax. Country Energy / Origin Energy made this very clear. So was Origin lying?

    If my bills went up by a couple of hundred bucks and the electricity company could work it out, why can't you, Stephen?

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    1. Liz Minchin

      Queensland Editor at The Conversation

      In reply to John Zigar

      Hi John – we've added another sentence on average NSW price rises, to be clearer. Stephen wasn't trying to suggest there had been no carbon price cost: just that it hadn't been as significant as bigger price drivers like network costs. Fixed this link too, you can read more here https://www.opengov.nsw.gov.au/desktop/13710

      All the best, Liz

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    2. Simon Paynter

      logged in via Facebook

      In reply to Liz Minchin

      Terrified of defamation action, no doubt. I guess you should be commended for being a bit more responsible with our money than the ABC is.

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    3. Simon Orme

      logged in via Facebook

      In reply to Liz Minchin

      Hi Liz, a better link is here:
      http://www.macgen.com.au/Resources/Documents/Annual-Reports/Macquarie-Generation-AR-2013.pdf

      Here's the relevant extract: Revenue, excluding interest income, increased by 13.1% to $1,080.8 million as a result of the carbon inclusive pool price. However, the increase in pool prices did not fully offset the increased carbon expenses. Market conditions during 2012/2013 financial year were generally subdued due to low demand, adequate generation supply and mild weather resulting in lower than expected pool prices…. Earnings Before Interest And Tax (EBIT), after allowing for fair value changes in financial instruments in the year ended June 2013, decreased from $228.7 million to $99.4 million, again due to the carbon tax.
      So Stephen's analysis is in fact flat wrong for the reasons explained in my post. In any case, the actual carbon tax paid for an emissions intensity of around 0.9 is $13/MWh, far less than the plus $22/MWh allowed for in retail prices.

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    4. Ben Marshall
      Ben Marshall is a Friend of The Conversation.

      Writer

      In reply to Simon Paynter

      Hi Simon,

      When editors and authors see a need to correct their articles on specifics like this, the effort to do is generally made. I see this more as a positive aspect of The Conversation, than a cynical exercise in blame avoidance.

      As a eucalypt-hugging, dreadlocked, rainbow beanie-wearing, alarmist, science-believing ABC-lover, I won't engage you re. your comment on the ABC. But don't worry - you'll get your chance to let rip as the Coalition continues its war to cripple or castrate our ABC and responding articles appear here.

      Cheers.

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    5. Simon Orme

      logged in via Facebook

      In reply to Simon Orme

      A further point just to be clear, the Macgen results reflect the overall revenue outcome for spot and forward contract including over the counter prices. So it isn't a spot vs. contract price thing.

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    6. Simon Orme

      logged in via Facebook

      In reply to Simon Orme

      And while I am at it, published ex ante estimates of carbon costs for residential customers were suss even before the real data were available. They assumed that around 12 per cent of covered emissions (households and small business) were paying more than half the $7billion tax. No one bothered to reconcile the estimates with the Budget Statement of Revenue.

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    7. Graeme Smith

      Citizen

      In reply to John Zigar

      Mandatory notice given in its own standout box on electricity bills in Newman's COALesced LNP Qld:

      Qld Competition Authority estimates the Federal carbon price and renewable energy target add about $259 a year to a typical 6.3MWh household bill - www.qca.org.au

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    8. Garry Baker

      researcher

      In reply to Ben Marshall

      "" When editors and authors see a need to correct their articles on specifics like this, the effort to do is generally made. I see this more as a positive aspect of The Conversation, than a cynical exercise in blame avoidance. ""

      So do I Ben ...it's unreasonable to suggest that experts able to trawl through published data and the official blurb are also in contact with things at street level ...insofar as there are only so many hours in a day to assemble an essay on the "perceived" state of affairs.

      However, this said - I'm firmly of the view that academics and those that write about a given subject these days need to gather more of their information through the side door ..Deal with people at the coal face, and insiders, etc.... And never take the official blurb as gospel

      Indeed, like some of the shabbiest divorces - hearing only one side of the story can often leave the truth begging.

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  3. David Martin

    Naturally talented sleeper and eater

    Thanks for the article Stephen (especially when you are so busy writing books)!
    What will the electricity market look like when the bottom of the "death spiral" is reached?

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  4. Hayden Pearce

    logged in via Facebook

    Where is the populist tag for Abbott and co? Ever since the introduction of the carbon tax they have repeatedly, and I mean repeatedly every day assured voters that their power bills would fall. Why the sudden realisation that they won't. It's taken you how long to reach this conclusion?
    Ever since the election the experts have dismissed Clive as a populist , a buffoon, a butt of jokes. The new senate would basically be conservative and support the government. Well fasten your seat belts. Clive is nobody's fool. The first week of the new senate and the government are rabble without a clue.

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  5. Henry Verberne

    Once in the fossil fuel industry but now free to speak up

    No Stephen the repeal of the carbon tax will cut prices nowhere near as much as the lying Abbott government has relentlessly claimed. On a daily basis Abbott has repeated this blatant lie.

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  6. John Newlands

    tree changer

    I think a couple of developments are on the cards
    1) an El Nino summer which will rekindle climate concern as it was back in 2007 when Rudd was elected
    2) more gold plating to prolong the power bill misery
    I'm hearing horror stories about brand new transformers being replaced on a whim in the knowledge the poles and wires enterprise will recoup the cost through regulated price rises. The enterprises seem unconcerned about retail power bills and their management culture needs to change. A year from now carbon tax will be remembered as relatively benign.

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  7. Peter Watson

    logged in via email @bigpond.com

    For some reason most journalists and commentators think that the carbon tax is only added to electricity.
    As Palmer stated quite clearly in his speech with Al Gore, the amendments were to cover all energy producers.
    Any goods wether it be cold storage or machining, if energy has been used then carbon tax makes up part of the price.
    Palmer has set nearly impossible conditions for abbott and crew to meet.

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    1. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Peter Watson

      And yet ... and yet ... according to the Minister for Stopping the Environment Greg Hunt on 7.30 tonight ... that's exactly what the er government has agreed to ... not once, not twice, but thrice ... but, due to some "communication breakdown" Palmer got spooked and withdrew the amendment.

      Hunt assured a spellbound - and utterly addled - audience that, come Monday the Palmer amendment will indeed be introduced into the Reps and ringmaster Tony will take on the mission impossible, a death defying challenge ... that toxic tax will be repealed no matter what.

      Gets sillier by the minute this.

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  8. Paul Andrew

    Retired

    I don't believe that Palmer’s carbon tax 'ploy' is to cut power bills. Rather, it is designed to show that Abbott has been misleading the public in two ways (i) saying the carbon tax was the reason why electricity and gas prices rose, and (ii) saying the average person would be $550 better off once the tax was stopped. I think Palmer's primary aim is to increase PUP votes at the next election.

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    1. Garry Baker

      researcher

      In reply to Paul Andrew

      Well he's doing a pretty good job of it, and if this latest ploy of his gets through ... ie: A 250% fine on power suppliers who fail to pass on the carbon tax savings to consumers, then his standing will grow.

      Indeed, if the LNP endorse it, then their's will grow too.

      Palmer may be a loopy fellow, but he knows a fair bit about handling money - In this case, money handed back to consumers.(voters)

      I for one, am puzzled why the author of this essay writes stuff like ...... "" Roughly speaking…

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    2. Account Deleted

      logged in via LinkedIn

      In reply to Paul Andrew

      Well, if Labor wins the next election, and the Independents retain the balance of power, do you really think PUP is going to roll over to have its tummy scratched? Australia will rapidly become ungovernable.

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    3. Delma Clifton
      Delma Clifton is a Friend of The Conversation.

      Biology Lecturer

      In reply to Account Deleted

      Just to step back a bit - is Clive Palmer just enjoying making the Liberal party dance and squirm in any way he can as revenge? Is he showing all of Australia that money is really in charge of politics? Is this what big business can do to any politician and party that does not return the favour of electoral funding? I wonder what Rupert could do if he decided to create the Murdoch United Party?

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  9. Comment removed by moderator.

    1. Liz Minchin

      Queensland Editor at The Conversation

      In reply to George Harley

      George, that's offensive & has been reported as such by other readers. Please read our community standards and think about whether you'd say this to other people in a real conversation.

      And I haven't been able to watch the comments on this as closely as I'd like as we're flat out editing stories, but to everyone: I know Australians aren't generally big fans of politicians, and passion is fine. But please – try to be civil and not use abusive language, not just directed at each other but also directed…

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    2. Georgina Byrne
      Georgina Byrne is a Friend of The Conversation.

      Farmer at Farming

      In reply to Liz Minchin

      Good to hear from you Liz. I'm sure that everyone appreciates the efforts you and the others make to keep the site civil. It is easy to get carried away, especially at the moment, with so much onshore political chaos as well as the misery of the unfortunates offshore and on boats. I apologise for the times my writing finger runs ahead of my good sense. I was trained early in sarcasm, unfortunately. Thanks again for your efforts and thanks to Stephen for his timely article.

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  10. david leitch
    david leitch is a Friend of The Conversation.

    research analyst

    Nsw final prices are meant to be fully deregulated from July 1 (haven't actually seen the regulation to this effect but assume it's been made)

    If the retailer sets the price they can't easily be compelled to pass ion an input cost cut. In a competitive market competition sets the price and that should lead to carbon cost falling out of customer bills

    Prices are also deregulated in Vic and SA.

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    1. Ella Miller

      retired

      In reply to david leitch

      Thank you Mr. King for a very interesting article.
      We are all so caught up in the energy prices and the Carbon tax that we are missing very important issues that go beyond the Carbon Tax repeal.
      We were told before the budget that we had a budget crisis on our hands....yet the Abbott Government could afford to call back the Senate one week early to to make Abbott's dream come true in relation to the Carbon Tax repeal. At the same time , it is has been kept very quiet and I stand to be corrected on…

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  11. Comment removed by moderator.

  12. Nikki Robson

    logged in via Facebook

    Just a small footnote... if you are living in some areas of regional Australia, there is only one supplier- no competition or ability to shop around.

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  13. Simon Orme

    logged in via Facebook

    Actually Stephen, your analysis is incorrect. Why is this? Because retail electricity prices are recovering substantial non-existent carbon costs (for retailers). The tax is on carbon, not electricity. There is excess generation capacity (nearly 4000MW in the NEM alone) and a lot more zero emissions energy (PV, wind etc). As a result, high emissions generators are unable to recover the carbon tax incurred (which is much less than the nominal number anyway for a bunch of reasons). See Macgen;s 2013 AR. So a substantial part of the carbon tax is borne by generators, not retailers, and should therefore not be added to retail prices. (Vertical integration complicats things.) The existing safeguards are not working. The Palmer amendment should be applied retrospectively and I look forward to seeing whether it could be.

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  14. Austin Adams

    some-time academic

    Hey folks, I just checked at http://www.abc.net.au/news/2014-06-27/tony-abbott-carbon-tax-savings-overstated-fact-check/5554748

    The quote given there is: "At a press conference on June 23, Prime Minister Tony Abbott said: "Every household right around Australia will benefit to the tune of $550 a year. So this is a $550 a year windfall to every household in Australia..."

    So...the $550 is an overall benefit, not only a price reduction on power bills. It includes gas and food price reductions. Let's see them!

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    1. Liz Minchin

      Queensland Editor at The Conversation

      In reply to Austin Adams

      Hi Austin,

      We're working on an article answering frequently asked questions about the carbon tax repeal, which includes the impact on electricity & gas bills in more detail. (What Treasury's forecasts for price falls, whether those forecasts are still likely to be right, other trends driving prices up etc.)

      We're planning to run that on whatever day the repeal happens, or at least a clear PUP/govt deal is struck so the repeal is more certain – so depending on parliament, should be one day next week, maybe as early as Monday.

      All the best, Liz

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    2. Garry Baker

      researcher

      In reply to Liz Minchin

      Well Liz .. perhaps you might also take on board that most of Australia's grid is still government owned these days ... Just not by Australian governments though

      For example .. Singapore Power (wholly owned by the Singapore Govt entity - Temasek) .. then there's the PRC giant - State Grid ... do tot up their Australian holdings through a vast range of supposedly Australian companies (household names). Then there's China Light & Power, the 100% owners of 'Energy Australia' with a truly huge asset…

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    3. Simon Orme

      logged in via Facebook

      In reply to Liz Minchin

      Hi Liz, since it appears that today is that day, may I suggest you look at the actual carbon tax data reported by generators, as per my link above? This indicates that for NSW in FY2012/13, the carbon tax embedded in wholesale prices was somewhere around $6/MWh for .9 emissions intensity. The actual carbon tax accrual liability for Macgen is equivalent to $13.65/MWh. But of this, Macgen was only able to recover 43.5% from higher prices, suggesting the wholesale price impact for Macgen sales (spot and contract) was $5.93/MWh. The available Delta numbers are similar and these two generators represent the bulk of NSW. The actual cost is just 22% of the AEMC's clearly incorrect December 2013 modelled estimate of $26.80/MWh (5.2 p57). It is unlikely the $5.9/MWh cost would have increased for FY2013/14 because demand decreased, emissions intensity decreased and average pool and contract prices decreased.

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  15. David Baxter

    Peer educator and Outreach worker

    What I want to know is where are all of Abbott's taxpayer-funded comments bloggers who always fill coments columns with "well, at least the grown-ups are back in charge" and "Tony didn't say that every Australian household would save $550, that was just an ABC plot" and "we can't fund science because it has a left-wing bias" and their usual crock of poststructuralism. Where are they? GN, are you out there?

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    1. Graeme Smith

      Citizen

      In reply to David Baxter

      David, Team North were very active in some comments threads over the past few days. I suppose events yesterday afternoon have again given them pause. Any amount spent on them today, and maybe until after next week would just be COALlition funds gone up in smoke.

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    2. Georgina Byrne
      Georgina Byrne is a Friend of The Conversation.

      Farmer at Farming

      In reply to Graeme Smith

      Now now Graeme, Greg might be looking for his magnifying glass, to read the fine print in his power contract, having seen Mr Ormonde's posts. He's very interested in renewable technology, is Greg, in spite of his scepticism in regard to AGW. Anyone who can spend as much time doing what he does is more likely to be a retired person (or persons) than a paid agitator, it seems to me. No one is being paid for the opinions posted here from the opposite perspective ...or is he/she?

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  16. Mike Kee

    Twixt Cup & Lip

    Regardless of your political outlook does anyone think the PUP & Independents control of the Federal Senate is not an enormous mistake & it is going to deteriorate and end badly for all Australians over the next 6 years. Yes 6 years!

    The carbon tax repeal process - right or wrong is just a small omen of things to come. Senator J Lambie in 6 months time of the next 6 years will be saying & voting for what ?

    Australia can prosper with a balanced & professional ALP or LNP able to lead the country. What I see in the Senate is a nightmare for everyone.

    Lets hope nothing really important , strategic or complex needs to be decided in the next 6 years that doesn't involve more Dinosaur Parks.

    Seriously - Clive Palmier nickel processor , coal miner , $1b ( maybe?) , friend of Al Gore is setting the Energy Policy of Australia? Wait for the press to turn on PUP , Clive & Lambie over the next 6 months & see their reaction.

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  17. Sir-Wayne Leviston

    logged in via Facebook

    This is all very interesting, but I think we are missing important facts.
    1. If the Carbon Tax is NOT repealed, we will move to an ETS next July.
    2. The $550 per household reduction promised by Abbot would be for ONE year only, and only proportional. ie.from the date of the repeal until July 2015.
    3. Gas prices have already risen 17.5% in NSW
    4. Electricity prices in NSW are now deregulated (who knew???) and increases have already been sought.

    I could be wrong here and know some will take me to task. Thanks in advance.

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  18. Allan Dorrington

    Engineering Officer

    While it is good sport watching Clive Palmer stir up Abbott and his incompetent cohorts, I fear that his party has only one real concern: the profits of Clive Palmer's businesses!
    I am happy to watch the fun, but fear the PUP gaining even greater power, they are far too dysfunctional!

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  19. Joseph Phillips

    Self employed

    In general, whenever I hear that someone promises a reduction in the cost of goods or services I have grave reservations that anything more than token savings will be be passed on to the customer for the longer term. Large organizations may be compelled by law to pass on some transient benefits, but they have many ways of quickly recovering their "losses".

    Don't forget their sole aim, despite whatever may be in their mission statements, is to achieve as great a return as possible for their Shareholders, Directors, higher paid Executives and friends in high places.

    The cargo cult or age of entitlement is not coming to an end. The flight has taken off and is climbing rapidly.

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