House debates

Tuesday, 26 October 2010

Questions without Notice

Electricity Prices

2:35 pm

Photo of Greg CombetGreg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Hansard source

However, with the pressures that are already in the system putting pressure on electricity prices, the uncertainty over carbon pricing is creating a new pressure in itself. That is because the uncertainty over the pricing of carbon is causing investment decisions, particularly in the generation sector, to be put off. It means that investment in low-pollution baseload power is being put off in favour of suboptimal forms of generation investment that are cheaper to build but less efficient and incapable of providing baseload power generation over the longer term.

The CEO of the Energy Supply Association of Australia, Mr Brad Page, has indicated this in some recent figures. For example, in 2009 the estimated capital expenditure for existing and new electricity generation plant over the next five years was $18 billion. However, in 2010 that figure for planned investments fell to $8.2 billion, and Mr Page cited the uncertainty over carbon pricing as one of the reasons that had occurred.

Simply put, the delay in investment due to the lack of a carbon price threatens to put up electricity prices in the future because suboptimal investment decisions will be made. The fact of the matter is this: a carbon price will provide certainty to investors, allowing them to make the most efficient long-term investments in baseload generation capacity in our energy sector, and that investment, based upon certainty in the sector with a carbon price, will in fact reduce the impact of price increases that need to be made in the energy generation sector. So, to be clear about it: without a price on carbon, investment in low-emissions baseload generation will be put off and prices will rise because less efficient investments will be made. For that reason, the responsible economic position for the opposition to take is to support this important economic reform, because in fact one of the greatest economic risks we have now is the negative, carping, opportunistic policy slogans that are put forward by the opposition.

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