Additionality in the VEET

When I reviewed energy efficiency trading schemes a few years ago,* the VEET was the only scheme we considered to address additionality. The section of the VEET Act 2007 we referred to was Division 2 (Prescribed Activities), §15 (2):

An activity may be prescribed to be a prescribed activity if the activity will result in a reduction in greenhouse gas emissions that would not otherwise have occurred if the activity was not undertaken.

However! I think we (I) referred to the wrong section – I think Division 2 (Prescribed Activities), §19 (2) is the appropriate one:

Without limiting the generality of subsection (1), the discount factors are to take into account any uncertainty associated with the reduction of greenhouse gas emissions that would eventuate from a specified prescribed activity or specified class of prescribed activities but for the existence of the VEET scheme.

* Betz, R., Jones, M.C., MacGill, I.M., and Passey, R. (2013). Trading in energy efficiency in Australia: What are the lessons learnt so far? [PDF]

Cost of living decreases if carbon price repealed?

I was asked this week to pull together some information on what effects the Federal Coalition’s repeal of the carbon price could have on households, specifically as regards their income and expenses (excluding environmental costs/benefits), with the background of whether any cost of living decreases could be used to justify cutting back on other welfare programs. This is only a very quick analysis (and I’ve doubtlessly missed some more rigorous analysis that others have done), but my short answer is that cutting welfare programs due to an abolition of the carbon price is a bad idea.

The most recent and comprehensive source of information on this is the Clean Energy Legislation (Carbon Tax Repeal) Bill 2013 Explanatory Memorandum. I’ve only skimmed it, but the gist is:

• The carbon price will be removed
• Household compensation will be kept at current levels, but no longer increased
• The ACCC will have new powers to investigate failure to pass through carbon price reductions for regulated supply (i.e. gas and electricity)

Taking these in turn:

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Time-of-use Pricing Uncomfortable, But Not Flawed

Discussing the Government’s renewed push for electricity market reform on ABC Breakfast radio, in particular time-of-use pricing and the ability for households to shift their consumption, Dr. Lynne Chester from USyd said,

we all know when we’ve got a household full of children and teenagers it’s incredibly hard getting them to switch off all those appliances and not use electricity in particular heavy use periods.

Well, yes: getting people – adults or children – to change their behaviour is hard – but it’s also absolutely necessary.

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Australian electricity prices (still!) low by OECD standards

Keith Orchison on Tuesday wrote about the little-reported fact that Australian electricity prices, despite having risen 50% in the last five years – see the draft Productivity Commission report into Electricity Network Regulatory Frameworks for more on that – are still amongst the lowest in the OECD (on a PPP basis).

That information comes from the Bureau of Resources and Energy Economics via the Department of Resources, Energy and Tourism, which Senator Xenophon’s quizzed on September 25th in the Senate Select Committee on Electricity Prices about whether Australians were paying above OECD rates for electricity. Here is DRET’s response [PDF], from which I excerpt the following answer and graphs.

Using a PPP measure, residential electricity prices in Australia averaged 12.66 USc PPP/kWh in 2010 and 14.20 USc PPP/kWh in 2011. Using this measure, Australian prices are well below the OECD average in 2010 and 2011.

Graphs after the jump.

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A Comment on the Political Discussion of Electricity Regulations

With her speech to the the Energy Policy Institute of Australia on Tuesday, the Prime Minister Julia Gillard has moved (or at least expanded) the discussion of electricity regulations from the roundtable meetings and conferences of industry, academia, and government to the political arena. Hurrah..?

A few points:

Are there problems with dividend policy, reliability standards, and peak demand? Yes.

Have the incentives in the existing regulations led some states to act in a manner that has unnecessarily raised prices for consumers (and thus led to increased profits for the states)? Very probably.

Has this been going on for several years, including under Labor governments? Yes – but so what?

Why shouldn’t we fix these problems now, regardless of why they’ve been raised?

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The Effect of the Carbon Price on Electricity Prices

Updated on Friday, September 13, 2013 at 18:11 by MCJ

Updated on Sunday, November 3, 2013 at 22:39 by MCJ

In an otherwise good article, Peter Martin today wrote that

[the TD Securities Melbourne Institute price index] reports a jump in electricity prices of 14.9 per cent and a jump in household gas prices of 10.3 per cent, almost all of which would have been due to the carbon tax. [emphasis mine]

This is incorrect, and, unfortunately, he is not the first journalist to make this mistaken claim. Evidence to the contrary be found in, for example, the reports from the relevant authorities in states that regulate their electricity prices:

New South Wales

IPART’s “Final Report – Changes in regulated electricity retail prices from 1 July 2012”

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Shedding Light on Fluro Myths

In my one-man quest to improve my office’s energy efficiency, I turn the air-conditioning on warmer, set timers, and switch appliances (e.g. printers) off when no-one is using them. One day of my office-mates – from a different division, it should be noted – queried my behaviour, claiming it would take far more energy to restart/turn on appliances and lightbulbs than I was saving by turning them off for a few hours. In fact, he claimed to have read that if you turn fluorescent lightbulbs off more than once a day, you can’t leave them off long enough in those 24 hours to save more energy than you’ll spend turning them on again.

Poppycock.

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