Power Play: Queenslanders face shock electricity bills

Courier Mail
Monday 4/8/2008 Page: 1

QUEENSLANDERS could be stuck with the highest electricity prices in the nation because the State Government is refusing to dump a controversial gas scheme. Premier Anna Bligh has ignored warnings to ditch the Queensland Gas Scheme amid concerns it will significantly drive up consumer power costs.

The Federal Government feared the scheme - which forced electricity retailers to source at least 13 per cent of electricity from gas-fired generation - could pose an "unnecessary cost on the economy" when a greenhouse gas emissions trading scheme starts in 2010. Consumers are already facing price hikes of 16 per cent, or up to $200 a year, under the ETS. NSW will abandon a similar program when the ETS starts.

The standoff came as new modelling revealed the ETS could drain $1.4 billion from state and territory coffers, severely undermining their ability to deliver health and other essential services and sparking fears of job cuts and tax increases. Economic modelling by the Canberra-based Australia Institute showed Queensland could be left with an ETS "hangover" of $289 million a year based on a modest carbon price of $20 a tonne.

The states have been holding talks with the Federal Government after a report showed millions of dollars would be sucked out of state budgets by an emissions trading scheme. But federal Climate Change Minister Penny Wong refused to reveal if the states were eligible for compensation and would not speculate on the viability of the Queensland Gas Scheme.

Senator Wong's green paper said the rationale for the gas scheme would diminish once an ETS started. "While the Queensland Gas Scheme is not necessarily incompatible with a national cap & trade scheme, both schemes are likely to promote the use of gas," the report said. "Therefore, its interaction with the Carbon Pollution Reduction Scheme needs careful consideration to avoid the imposition of unnecessary cost.

"State and territory governments are encouraged to discontinue their market-based program once the carbon pollution reduction scheme commences." A spokesman for Ms Bligh failed to confirm whether the gas scheme, which has promoted significant investment of gas-fired power stations, would be ditched.

"The Queensland Gas Scheme. .. is providing a more environmentally friendly alternative source of energy and we will be working with the Federal Government to make sure any new arrangements continue to involve the development of our gas industry," the spokesman said.

Under the scheme the quota of gas that must be sourced for electricity will increase from 13 per cent to 15 per cent in 2010, rising to 18 per cent by 2020. But stakeholders warned it would theoretically drive up prices in Queensland. The Australian Industry Greenhouse Network said Queensland's scheme added another layer of administration and cost that would be passed on to consumers.