Regulator wants energy target dumped

The NSW pricing regulator IPART has called on Canberra to abandon its renewable energy target now that a price has been put on carbon.

It has also thrown its weight behind the need to reduce electricity reliability standards to stem spiralling power prices.

The Independent Pricing and Regulatory Tribunal also backed the roll-out of so-called smart meters, although not for their introduction to be mandated as in Victoria, where the cost of the introduction has risen fourfold to $2.3 billion.

In a submission to a federal government inquiry into power prices, IPART highlighted the role of high reliability standards in forcing prices higher in NSW. This should be reduced by adopting the methodology used in Victoria, it said.

The main reason for rising prices in NSW has been a doubling in real terms in transmission costs, which now make up about $654 of a typical household's annual electricity bill.

However, the combined cost of the carbon price, the renewable energy scheme, the climate change fund and the energy savings scheme adds a further $316 to the bill.

Of this, the carbon price accounts for about 9 per cent, or $167, of a bill, with the other "green" schemes adding a further $102 a year, which is a near fourfold rise from $26 a year in 2007-08.

"We are concerned that these green schemes may be adding unnecessary costs to energy bills now there is a carbon price, and may be creating investment-distorting complexities in energy markets," IPART noted in its call for the renewable energy target to be axed.

By 2020, for example, the cost of the scheme might exceed the carbon price, it said.

"Given that the [renewable energy target] is not complementary with a carbon pricing mechanism, we recommend that the Commonwealth government close the [renewable energy target]."

Along with declining productivity in the power sector, IPART pointed to a poor regulatory framework for putting upward pressure on prices. New investment should be limited to "efficient" items only, it said.

As well, IPART called for the use of more time-of-use, or smart, meters, which allow electricity companies to charge more varied tariffs, such as boosting charges at peak demand times and cutting tariffs at off-peak times. This encourages a reduction in peak-time use, helping to curb unnecessary investment.

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