Power price fall under Coalition in doubt

10 Dec 2012, 4:07 pm   -   Source: AAP
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Energy retailers say consumers won't see instant cuts in their bills if the carbon tax is abolished. (AAP)

Energy retailers say consumers won't see instant cuts in their bills if the carbon tax is abolished. (AAP)

Energy retailers say power prices won't come down immediately if the carbon tax is abolished by a federal coalition government.

Australian households won't see instant cuts in their power bills if the federal Labor government's carbon tax is abolished, energy retailers say.

Opposition Leader Tony Abbott plans to repeal the carbon price on big polluters if his Coalition wins the 2013 national election and "instantly" reduce electricity bills by 10 per cent.

But Energy Retailers Association of Australia chief Cameron O'Reilly says that won't be the case.

"If the carbon price was repealed, customers would not see an instant decrease in their energy bills," Mr O'Reilly told AAP on Monday.

Legislative changes and regulatory reviews would have to take place before retailers could review pricing and notify customers.

But it's not clear if prices would fall in any case.

Mr O'Reilly said scrapping the tax would affect bills in different ways because of the variety of customer contracts.

And the carbon tax component of the wholesale price, which retailers pass on to customers, involves energy from a range of sources - such as coal, gas, hydro and wind - of different carbon intensities.

"Also there are a number of assumptions about how this is passed on to the consumer," Mr O'Reilly said.

He agreed network and wholesale costs and green schemes had contributed to recent price rises in energy bills.

In October, South Australia's energy regulator Paul Kerin said the wholesale price of power could fall between 4.5 per cent and eight per cent if the carbon tax was removed, allowing for an "adjustment" in retail prices.

Opposition climate action spokesman Greg Hunt said this showed electricity bills should fall when the carbon tax was abolished.

"We expect, on the basis of what the regulators have said, that the bills would fall by the full amount of the carbon tax charge," Mr Hunt told AAP.

The coalition expected retailers would remove the carbon tax from the day it was abolished.

"We would work with regulators to ensure that this was in place from day one," Mr Hunt said.

A spokesman for Climate Change Minister Greg Combet told AAP that Mr Abbott would not go ahead with the repeal, so the question of price reductions was redundant.

He said carbon pricing had none of the dire economic consequences predicted by Mr Abbott, and its revenue was delivering renewable energy, tax cuts and increases in family benefits and pensions.

Consumer group Choice estimates power prices have risen more than 50 per cent in real terms over the past five years, mainly due to network costs.

State authorities have begun assessing power price rises to start from July 1, 2013.

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