Power bills tipped to lift as tax row rolls on - Industry leaders call for certainty

Age
19 Oct 2011, Page: 9

AUSTRALIANS face further electricity price rises and even strains on the grid as the political brawl over the carbon tax fosters uncertainty among power generators and the clean energy sector, experts have warned.

Opposition Leader Tony Abbott came under increased pressure yesterday over his warnings to business against planning for any long-term involvement in a carbon price and his vow to scrap every plank of the carbon tax, including the $10 billion Clean Energy Finance Corporation (CEFC), which would fund green technology. The backlash came as the government was forced to swiftly correct comments from a public servant to a parliamentary hearing that suggested the $10 billion green fund would hit the federal government's budget bottom line a statement the opposition seized on as evidence of a budget black hole.

Experts and some industry leaders said yesterday that the Coalition's fierce rhetoric of recent days and the uncertainty it was creating meant the energy industry could not plan investment and could not hedge against carbon price fluctuations by buying future-dated carbon permits. Clare Savage, interim CEO of the Energy Supply Association of Australia, said that without future-dated permits, energy suppliers could not make longterm contracts with their customers, which would push up prices.

"Any issues with purchasing forward carbon permits will drive up electricity prices unnecessarily", she said. "It is a problem for us, what the opposition is doing. We make 40 or 50-year investments and they're not even giving us five years of information". Nathan Fabian, chief executive of the Investor Group on Climate Change, representing super funds and investment managers with more than $600 billion under management, said: "There are consequences in terms of price impacts in electricity markets. Prices will rise because of uncertainty".

Law firm Baker and McKenzie's global head of climate change Martijn Wilder said: "For a long time, investors have waited for some policy certainty and some real stimulus to grow the renewable energy sector in Australia and the CEFC provides a core part of that stimulus". Infrastructure Australia head Michael Deegan told a Senate hearing that the uncertainty could put strain on parts of Australia's power grid if investment froze up.

For the first time yesterday, the Coalition vowed to scrap the $10 billion green fund as quickly as possible, arguing that green technology investment should come from the private sector and was no place for government. "We think that if the project is economic it should stand up on its own two feet", Mr Abbott said during a visit to Queensland. He described claims he was creating uncertainty as "nonsense on stilts". Opposition spokesman Andrew Robb compared the fund to Tricontinental, the investment bank that collapsed in 1990.