The mainstream media have been mooting that the electricity prices are going to rise significantly over the next few months and regularly rise over the coming years. We recently received advice from our energy provider, (we provide more energy to them than they do to us), that our energy plan benefits are changing. An itemised list of the changes appeared below the large bold statement “Your energy plan benefits are changing” and were identified as “Your current benefits” listed as “No exit fee” and in column two was “Your new benefits” listed as “No exit fee“. I didn’t notice any big difference, and since the Devil is always in the detail, I got into the detail which was contained in the following 16 pages.
Located on page 13, were the graphs shown in picture 1 advising of the current rates and the new rates which will be effective as of the 22nd of the month. When I asked Google to search for “contract supply electricity fixed price 10 years” to check on my understanding that the electricity supply prices should not be changing significantly, if at all, because of the existence of fixed price supply contracts for the next decade, Google advised that “people also ask”, “Are electricity prices going up in 2022 in Australia?”?, to which the reply was, “The Australian Electricity Market Operator (AEMO) reported that in the first quarter of 2022 wholesale prices went up 141% from last year, and the ASX showed prices this quarter at $AU302“. I have no idea of what “AU302” means in that context but the google quote was taken from the following site https://newsroom.unsw.edu.au/news/business-law/energy-crisis-why-are-electricity-prices-set-rise which also advises that “energy prices in Australia are set to go through the roof, … “. That doesn’t sound good and why would that be, because Australia has enormous reserves of coal and gas, used in the production of most of the electricity consumed in Australia? In fact, Australia exports coal and gas to countries where you can buy these commodity’s cheaper even after them having been exported and transported.
Methinks whoever came up with that deal wasn’t thinking of the “commonwealth” of the Australian people.
The birthright of any child is to share in the wealth of the land in which they were born such that the wealth of the land is shared amongst the people, … hence the term Commonwealth. Further to that, the article advises that “Yes, Australia extracts enough coal and gas to sustain its own needs. But it is also part of the global trading market and is linked by supply agreements to export most of its fossil fuels. Revoking or significantly reducing Australia’s exports cannot be done easily in the short term. Australia remains almost entirely dependent on imported energy, leaving the country vulnerable to future global price shocks and supply disruptions“.
Does that sound like a fair and equitable deal for the Australian people?
Energy retailers have advised in interviews on mainstream media not to purchase electrical energy from their companies because the consumers can purchase a kilowatt hour of retail electricity cheaper elsewhere. Don’t buy from us because you can buy energy cheaper from our competitors. That is the opposite to what I had understood to be the concept of advertising. Don’t buy from us is “economic suicide”.
The advice is that a consumer can buy retail energy less expensively than professional retailers can purchase it wholesale.
Maybe the wholesale price of electricity has gone up by 141%, and if so, how is the system even functioning when consumers can purchase retail electrical energy cheaper than the wholesale price.
As further advised, the price of electricity is going to go “through the roof” because of overseas events and our “agreements” regarding contractual conditions of export of our energy sources including coal and gas that we sell in abundance and can be purchased in other countries less expensively. You can decide at this point whether we have a fair and equitable agreement in this arrangement or whether the table may be tilted slightly … or more. But don’t stop reading just yet, the confusion increases.
Continuing further and connecting the dots I will refer to picture 1, hereinafter referred to as exhibit A (your honour) showing the attached graphs located on page 13 of the “the letter” we received. It shows that we were being paid $0.61 for each kilowatt hour we exported into the grid, however as of 22nd June 2022, our feed in tariff would be reduced $0.44 for each kilowatt hour we exported. The letter also advises that we have been paying $0.23.15 cents per kilowatt hour purchased from the grid but after the 22nd of June 2022 we will only be paying $0.19.67 cents per kilowatt hour.
So, to summarise, we have been paid $0.61 to export a kilowatt-hour but we have been able to buy a kilowatt hour for 23.15 cents. AGL has been paying us almost 3 times the amount for our exported electricity as they have charged us to purchase from them. That doesn’t look like a very workable model but is a result of an arrangement cemented back in 2012 and will be in force as contracted until 2028 whereby every kilowatt-hour a person who still functions under that agreement will be paid 44 cents per kilowatt hour from the state government.
Perhaps it was the same type of politician who came up with that arrangement as has made the arrangements regarding the export of our coal and gas.
As advised, the price of wholesale electricity has gone up by 141% but the retail price of the electricity we can buy now will be reduced by a little less than 20%.
I hope this is making sense to you because if it is, that will be one of us.
Just to reduce the confusion let me explain that AGL has in fact been paying us 17 cents per kilowatt hour not 61 cents because the 44 cents is guaranteed by the state government. As of the 22nd of June 2022, that is, under the new agreement AGL will effectively pay us nothing for the electricity we export to the grid because the 44 cents per kilowatt is paid by the state and AGL paid 17 cents per kilowatt hour to take it up to $0.61. Now they advise they will pay nothing. Who wouldn’t want 25 kilowatt hours of free energy every day? Nobody … that’s who.
Before the 22nd July 2022, Our Feed In Tariff (FIT) had two components including the guaranteed 44 cents per kilowatt hour guaranteed and paid by the state and the 17 cents per kilowatt-hour AGL pay to buy green energy as they are “forced” to do by “Law”. Now they will pay nothing/zippo/zilch in an environment that has had an apparent recent increase of 141% in value. Effectively they will now pay us nothing for our exports reducing payments by 17 per kilowatt hour but are sweetening the deal by charging us 3.48 cents per kilowatt hour less to purchase. Is everyone this is happening to happy?
Private Companies who sell electrical energy in Australia must have a green component. They are all private companies. Even the government companies are private companies as they have an ABN. Yes, all of them. How does any governmental arrangement have any jurisdiction in a private operation and can “force” you to buy anything at a higher rate than you may be able to sell it for?
Maybe it’s the same political thinking or same political agenda that has led to this “legally” required energy mix referred to as fossil fuel generated electricity and renewable energy.
Ignoring logic and moving on, electrical companies can satisfy their requirement to be c
ompliant with the “green energy requirement” by purchasing STC (small-scale technology certificates) or what used to be known as RECs (renewable energy certificates) and they can also purchase energy generated from “renewable” sources such as Wind and Solar. Imagine running an energy business whereby you must purchase a certain amount of green energy and pay more for it than you can sell it for.
I have said many times in the past, “any commodity is always less expensive if someone else pays for it”. I am not talking about the 17 cents per kilowatt hour AGL had been paying but the guaranteed 44 cents per kilowatt hour the Qld taxpayer chipped in. Buying an energy unit for $0.61 and the selling it for $0.23.15 is not sustainable and almost insane.
Subsidies and arrangements to prop up energy production sources will not survive in a genuinely free marketplace and will ultimately fail as the subsidies are withdrawn.
All energy prices seem to be “going through the roof” or “out of control” including gas. The following quote is taken from this site https://www.theguardian.com/australia-news/2022/jun/04/out-of-control-gas-prices-likely-to-filter-down-to-australian-consumers-food-processor-says
“Out of control’ gas prices likely to filter down to Australian consumers, food processor says. One of Australia’s largest regional food processors says energy costs are “out of control”, with already elevated gas prices tripling since the company signed new contracts in early 2022” 3 June 2022
If this is true how can Origin sell gas supplies for 50% off, as shown in their online advertisement, and still be viable?
If you understand the logic to all the information above … once again … that makes one of us. Fair and equitable incentives, honesty, integrity, and logic all seem to be qualities of yester world. It would appear that those days are over in so many critical and now compromised endeavours. The days of logic and integrity are “All Over Red Rover”
John Lynn