The true cost of energy

West Australian
Monday 15/11/2010 Page: 22

Again we see the WA Opposition criticising the Premier for increasing domestic energy prices. Unfortunately this political populism only serves to oversimplify critical issues regarding the true cost of energy, water and other resources, and who should pay these cost.

For too long, WA households and industry have enjoyed heavily subsidised energy. Make no mistake, households have borne the cost of these subsidies amounting to hundreds of millions of dollars of taxation revenue. The effect of these subsidies has been highly inefficient energy use and chronic under-investment in energy efficiency in WA industry and households alike. Conversely, in California, where energy efficiency is taken seriously, demand for the resource has remained stable while the size of the economy has been rapidly increasing.

Of course we need to ensure that low-income households do not bear an inequitable burden as a result of increasing energy prices. Creative thinking will identify a range of ways to achieve this without undermining the user-pays model that is critical to efficient operation of the energy market.

The utility cost assistance scheme is one such measure. Even better would be to provide information and financial assistance to assist low-income households upgrade homes and appliances to become more energy efficient. The shift to cost reflective pricing is a big step forward, however recent energy policy in WA has been a case "one step forward and two steps back".

The massive energy demand growth projected for WA is due to be met by an equally massive expansion in coal-fired power stations. While other countries and even Victoria are shutting down these dinosaurs (dubbed "death factories" by respected climate scientist, James Hansen), the WA Government has approved three new coal plants and is recommissioning a unit that was shut down years ago because of its pollution.

It is great to see that the Barnett Government is moving towards a much-needed strategic energy plan for WA. Sadly this could come too late the next generation of energy generation could be locked in if coal power proponents in WA are allowed to start pouring concrete. If this happens, WA households will be forced to bear the full burden of a carbon price as well, but this time the price increase will have been entirely avoidable.

The alternative is that both sides of politics wake up to the incredible renewable energy potential we have in WA, and start the urgent conversation about how our energy needs can be met from a combination of renewable energy and energy efficiency.

Piers Verstegen, director, Conservation Council of Western Australia (Inc.).