The state government’s proposed energy policy may sacrifice long-term stability for short-term gain, according to a leading energy expert.
Energy Minister Guy Barnett announced on Sunday the government would table legislation in the coming week that would cap electricity price rises by CPI.
Electricity prices are currently linked with Victorian prices, however under the new legislation this partnership would be severed with the state exiting from the National Energy Market.
Mr Barnett cited the Victorian market’s volatility as a key reason for the change and estimated that households would save up to $180 on their energy bills if the legislation passed.
We’ve got concerns that in the long-term you’re running away from competition.Goanna Energy consultant Marc White
Goanna Energy consultant Marc White said the policy would be good in the short-term to protect consumers from volatile pricing, but may result in wholesale price rises in the future.
“We’ve got concerns that in the long-term you’re running away from competition,” he said. “We’ve only got one retailer competing with Aurora Energy in the small to large business marketplace, being ERM [Energy].
“If you continue to intervene in the market, will that lead to them exiting the market?
“Intervention in the market makes it continually less likely for new entrants.”
The state government intervened in the energy market last year to cap energy price increases by 2 per cent in the face of 15 to 20 per cent rises on the mainland.
The $20 million energy rebate was necessary to control prices, because of Tasmania’s involvement in the National Energy Market.
“Had the Liberal government not intervened last year, this volatility in prices would have flowed through and impacted on Tasmanian households,” he said.
“Our plan will break the former Labor-Green government’s link with mainland prices and give Tasmania the lowest power prices in the nation by 2022.”
Labor energy spokesman David O’Byrne did not reveal whether the party would support the legislation.
We’ve got a strong and growing economy, the building and construction industry is on the up and we’re backing it.Energy Minister Guy Barnett
Mr Barnett also announced the government would extend the first home builders grant for 12 months in the upcoming June budget.
The grant gives $20,000 to people building their first home.
The boost comes after the government increased the subsidy from $10,000 to $20,000 in the 2016-17 budget.
“We’ve got a strong and growing economy, the building and construction industry is on the up and we’re backing it,” Mr Barnett said.
Deputy Labor leader Michelle O’Byrne said the policy would not provide immediate benefits to the housing crisis.
“We have people who can’t get into housing and are looking for social housing, but we also have people that are looking for rental accommodation and there simply isn’t enough there,” she said.