Why power prices are rising in our resource-rich state

/Why power prices are rising in our resource-rich state
Why power prices are rising in our resource-rich state 2017-06-13T10:09:16+11:00

31 May, 2017

Nathan Vass

Courtesy of the Courier Mail

IT’S the question no politician wants to be asked: Why is Queensland, one of the richest energy resource regions in the world, once again facing electricity price hikes that will further stretch already strained business and family budgets?

Queensland has abundant natural supplies of low-emission coal and gas.

It has these assets in such abundant supply that the state exports huge quantities of coal and gas to foreign countries, with the massive Adani coal project for north Queensland just one example of the state’s ability to assist other nations – in this case India – lift millions out of poverty with cheap and reliable electricity.

Yet back home, people in the state are facing yet another power bill price hike, possibly as high as nearly $400 this year on the average annual bill of more than $2500.

This is because the cost of wholesale energy – which makes up a quarter of your bill – has risen nearly 60 per cent in the past year.

This is due in part to rising export gas prices and the closure of traditional power sources such as the Hazelwood power station in Victoria, which was closed following state government policies designed to establish significant disincentives to keep the plant operating.

Quite simply, massive policy failures by federal and state governments have left families and businesses to foot the bill for political flights of fancy designed to warm the hearts of inner-city elites, who have little concern for the loss of industry and jobs that is associated with unsustainable renewable energy targets.

In other states, we can see the damage being wrought on the economy by high electricity prices.

South Australia, which has Australia’s highest energy prices and which suffers regular power blackouts, is of course the best example of what not to do.

That state’s “pioneering” 50 per cent renewable energy target forced the closure of baseload power supplies and an over-reliance on unreliable wind energy, which is heavily subsidised by taxpayers to compete with coal and gas.

The result: at least seven major power outages since last September and the highest power prices in Australia.

The state’s peak industry group, Business SA, says high electricity prices are largely to blame for the unemployment rate soaring to 7.3 per cent in April while all other states fell.

Queensland has abundant natural supplies of low-emission coal and gas.

So can Queensland heed the lessons of SA before succumbing itself to disastrous policy measures that deter investment, jobs, electricity affordability and security?

The signs are not good.

In Queensland, the Government has outlined a 50 per cent renewable energy target – a massive rise from the state’s current position of less than 10 per cent.

Renewable energy is subsidised, with those costs passed on to consumers. The more renewable energy that is pumped into the national grid, the more consumers have to subsidise it. This also drives traditional baseload energy sources out of the system – decreasing reliability as the grid relies on the wind blowing and the sun shining.

Australia, and Queensland in particular, has incredible coal reserves. This industry supports around 150,000 jobs and can provide our manufacturers with affordable and reliable electricity.

Turning our back on our coal reserves – resulting in higher prices, lack of energy security and massive job losses – makes no sense.

It’s time to accept that there is a middle ground in this often hysterical debate.

Reasonable Queenslanders want a clean energy future that doesn’t shut down jobs and industry and drive electricity prices ever higher.

Renewables will play a significant role in that clean energy future. But the only sensible way forward is to also embrace clean coal technology that allows Queensland to continue to leverage its natural resource advantage.

Clean coal is real. It is a technology that is used around the world to reduce emissions by up to 90 per cent, looking after the environment while allowing major economies like India, China, Japan, the US and the Netherlands to continue to have access to reliable and affordable electricity.

In Australia, Canberra has expressed its support for clean coal alternatives and it is hoped they continue to walk this sensible middle path.

The best thing Canberra could do to demonstrate its credentials would be to build a clean coal power station in North Queensland, a region desperately in need of secure and reliable energy so it can attract new industry and investment.

This would be a major step in the right direction towards a clean energy future that looks after jobs and investment, while keeping electricity affordable and reliable for families and businesses right across Queensland.

Nathan Vass is CEO of the Australian Power Project