01.National Energy Savings Initiative
The Australian Government is considering the introduction of a national Energy Savings Initiative to reduce electricity bills.
While different options are under consideration, the scheme could require energy companies to help households implement energy saving measures. There will be a progress report presented to the Australian Government in the first half of 2012.
CHOICE is on the advisory group for the National Energy Savings Initiative and we have made a submission supporting a scheme that is designed to deliver benefits to all households outweighing any costs.
The National Energy Savings Initiative was recommended in the 2010 report of the Prime Minister’s Task Group on Energy Efficiency. The report estimated that such a scheme could save households up to $296 a year in 2020 and save $3.5-12 billion in deferred energy generation and transmission infrastructure by 2040.
Why are electricity prices rising?
Electricity prices are continuing to rise, projected to increase an estimated 30% nationally by 2013/14 .
The main driver of price rises is network costs, the multi-billion dollar price tag of expanding and maintaining the poles and wires that carry electricity from the power generator to our homes. There is $55 billion worth of this spending already locked in, and it was recently estimated that on a national level, network costs would contribute about 40% to increases in electricity prices from 2011/12 to 2013/14 . Network costs currently make up about 40% of the average household bill.
Stop building unnecessary poles and wires – spend $1 to save $2
In the face of these structural drivers of price increases, what can be done to reduce the impact on households?
CHOICE believes that part of the solution is to reform the energy market so that network businesses, the owners of the ever-expanding poles and wires, face more scrutiny in the costs they pass on to consumers and are forced to investigate other options to defer or displace network costs.
Recent research has found that spending by Australia’s electricity networks on efforts to reduce energy demand is equal to just 0.4% of their capital expenditure of $9 billion per annum. The same research also found that each dollar spent by electricity networks aimed at reducing demand saved more than two dollars which would have gone to network infrastructure costs.
Increase energy efficiency
Another part of the solution is to reduce the amount of energy Australian households consume by improved energy efficiency. This has the direct benefit of reducing individual bills, and the potential for broader benefits by reducing the demands on our energy networks, especially rising peak demand.
Peak demand means that the networks are being built to cater for demand which is only fully utilised for a few days each year. However, the costs of building these networks still needs to be met the rest of the year despite not being utilised at full capacity. It has been estimated that a $1,500 air conditioner requires an extra $7,000 to upgrade the electricity network to make sure there is enough capacity to run the air con on the hottest day of the year.
Source: Australian Energy Market Operator, 2011 Electricity Statement of Opportunities for the National Electricity Market
What can you do to reduce bills?
• Go behind the scenes at our CHOICE labs for expert advice from our testers on appliance energy savings.
• Read our energy switching plan for tips on how to get a better energy deal.
• Use the carbon price calculator for tips on additional savings you can make on energy bills.