‘Blue tape’ risks pushing up electricity costs

The Abbott regulations to cut ‘red-tape’ are restricting regulators ability to progress energy saving standards which have delivered big saving to Australian household electricity bills.

Australia used less electricity in 2014 than in 2013, or in any year since 2006, despite constant population and economic growth, a new report from The Australia Institute reveals.

Households in the National Electricity Market (NEM) saved $2.5 billion in 2014, or $295 each, by using less electricity. Household electricity demand was down 13 per cent from its 2010 peak.

“There is great potential for more large savings through energy efficiency. However, while several new proposals were well advanced at the time of the 2013 election, there has been almost no progress since then,” said report author, Hugh Saddler.

“The key reason behind our sudden halt in energy efficiency is the Abbott Government’s determination to reduce “red tape” even when regulation is efficient and beneficial.

“Under the Abbott Government, to introduce a new regulation we have to abolish an existing regulation within the same program. To make new appliances more energy efficient, we have to find other energy standards that we’re happy to abolish. It just doesn’t make sense.”

“The Government has created a new colour of tape – blue tape, which ties the hands of regulators from making good rules to the benefit of business and the community.”

General business and large industry also reduced their demand for electricity in 2014, down around 5 per cent from 2010-11 peaks. Importantly, businesses used less electricity while increasing their output, meaning production became less energy intensive in all states. Since 2006 electricity use per million dollars of gross state product reduced from 70MWh to 60MWh. (Graph)

The key factors behind these savings have been:

  • Energy efficiency regulations, such as Minimum Energy Performance Standards (MEPS), which force manufacturers to make more efficient household appliances like TVs, freezers and light bulbs. Regulated energy efficiency programs account for around 2/3 of the savings to households and around half of savings to general business.
  • Businesses making active investments in reducing energy use. For example, commercial property owners with office buildings and shopping malls have programs to systematically upgrade their buildings’ energy performance. Aquatic centres and public pools have been investing in co-generation and upgrading facilities. Such investments account for around half of the energy savings to general business.
  • Response to higher electricity prices – around a quarter of household savings are a response to higher prices.

“This is bad news for business too. Inefficiency hits their bottom line and their competitiveness.

“This evidence shows the Government that a simplistic sound bite policy around regulation can easily backfire in the real economy,” Saddler said.

Full Report available – Here.

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