Energy price impacts arising from RET (8/2009)
The recent Senate approval of the National Renewable Energy Target (RET) legislation is a necessary stimulant for new renewable generation projects, however the RET legislation joins a long list of other national and state schemes.
Other schemes include the existing Mandatory Renewable Energy Target, NSW Energy Saving Scheme (NESS), Queensland Gas Electricity Certificates, and the Victorian Renewable Energy Target. The cumulative cost impact of these schemes can be between 3% and 10% on the total electricity bill depending on the state. Customers with sites in NSW, Queensland and Victoria are hit the hardest. Furthermore the cost of these mandatory environmental schemes does vary by supplier and most customers do not pay enough focus on the price of each of these elements. This is partly because the information is not well disclosed on the bill.
Energetics constantly receives and compares energy price offers, and reviews invoices as part of our bill processing service. From this information we have found instances where customers are paying well above the market rate for these charges.
Analysis from a range of customers shows that the current range in prices is:
The additional RET cost will start from 1st January 2010 and escalate each year until 2021. This will increase the cost of mandatory renewable energy costs from a minimum of $1.8 /MWh today to an expected price of potentially $6/MWh in 2012/13. The long term price impact of all these schemes will vary depending on if, and when, the Carbon Pollution Reduction Scheme is passed.
The NESS is expected to replace the NGAC scheme in NSW. As no certificates have yet been created, pricing is still being seen at the penalty rate which does not indicate the future pricing.
In managing these costs it is important to also be aware of exemptions. For example trade exposed industries that are particularly intensive users of electricity will have the right to apply for an exemption from the NESS and expanded RET if they are recognised under an emissions-intensive trade-exposed (EITE) activity.
For further information please contact Elizabeth Sciberras on 02 9929 3911.
Disclaimer:
To the extent that this information contains prospective financial content, that information has been based on current expectations about future events and is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described in such prospective financial information. Past performance is not indicative of future performance.