Electricity price rises: the cost of making ordinary people pay

Huge electricity price rises in NSW show that Rudd’s CPRS will have more impact on power costs for working people than the government has admitted. From July 1 costs for households will rise by up to 64 per cent over three years.
The majority of the price rises, mandated by the NSW Independent Pricing and Regulatory Tribunal (IPART), are due to the cost of building new electricity transmission lines in the state.
But about a third of the price increases are a direct result of the CPRS. The CPRS, if introduced, will cause a 24 per cent rise in power costs, or $300 a year, over three years.
IPART’s estimate for the impact on power prices of the CPRS is much greater than that of the federal Treasury.
The Treasury predicted bills would rise by just $200 a year as a result of the scheme. This means the compensation the federal government is providing to households, designed to offset the impact of price rises caused by the CPRS, will be inadequate.
This news has led to calls for Rudd to increase compensation to households.
NSW Energy Minister John Robertson gently reminded his federal colleagues, “The Prime Minister is on the record saying low income families will be fully compensated for the costs associated with the CPRS, whatever they are”.
What this all shows is the huge uncertainty in modelling the effect on power prices—and working class living standards—of putting a price on carbon, whether through an emissions trading scheme or a carbon tax.
It is further evidence of the danger in promoting them as a way to tackle climate change. The climate movement cannot afford to line up behind these kind of solutions—which are going to see ordinary working class people pay, not the polluters who got us into this mess.


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