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Cost of living pressures are front of mind for many Australians, particularly due to rising electricity prices. The following policy brief highlights and discusses the key factors behind rising electricity costs in Australia.
How the transition to a modern, clean energy power sector will affect electricity prices is an important issue, which deserves the close attention of policy makers. Over recent months, there have been many claims about the impact pricing designed to unlock Australia's abundant clean energy resources and reduce our dependence on polluting power sources will have on household electricity bills.
This policy brief argues that when compared to other factors a price on pollution will have a relatively small impact of household energy bills.
A pollution price of $25/tonne will add around $3.86 per week to the average Sydney household’s energy bill in 2012/13. This is slightly higher than the amount estimated by Treasury, but a third less than suggested by the Coalition and some business groups. Energy efficiency policies can reduce the impact of pollution prices by at least $1.41 per week, reducing the difference to $2.45 per week. This is less than the cost of a meat pie or a fifth of the value of food wasted by the average household each week.
