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St Vincent de Paul Society proposes “lifeline” cap to ease social impact of electricity price rise

Posted by gmarkets on 3 September, 2007

The Federal Government’s proposed carbon trading scheme will consign households to an annual average electricity price increase of $200, creating a significant impact on those whose incomes are hovering around the poverty line, writes Gavin Duffy, manager of policy and research at the St Vincent de Paul Society Victoria, in The Age (14/8/2007, p. 10). Fixed price proposal for basic consumption: “On the face of it,” says Duffy, “the increase may not appear substantial, but for low-income households, in particular pension and benefit recipients, this is equivalent to a week’s income. The Federal Government should ensure that social equity principles complement the environmental outcomes. The St Vincent de Paul Society believes that the potential social impact of the scheme can be eased if the Government implements electricity consumption price principles. These would;

• protect low-income, low-volume households; and

• support and reward those who conserve energy’

• cap a specific amount of household electricity consumed daily at a fixed price per kilowatt. This “lifeline” cap would exclude costs associated with carbon trading. The carbon trading costs would be applied after the cap was exceeded.”

Incentive to reduce consumption: “The threshold would be based on the amount of energy used to run an average refrigerator, prepare a meal, heat and light a single room and provide hot water for bathing,” Duffy clarified. “In effect the more you use, the more you pay. This would serve several policy objectives. It would provide a ‘lifeline’ price cap for low-income households. This would partially protect many low-income energy consumers from carbon pricing being loaded up in the first block of electricity consumption. This is a potential risk as most carbon is produced from a base-load generation. Such pricing would not only reward those households with low electricity consumption, it would also serve as an incentive for all households to reduce consumption. It would reward households that have sound environmental practices.”

New plan could complement smart meter roll-out: “The proposal would be consistent with and complement calls by environmentalists for all households to be issued with a carbon emissions budget. Such a proposal, while increasing electricity costs for households with large consumption (costs they would be exposed to without the introduction of pricing principles), would make alternative energy sources such as solar photovoltaic technologies more cost competitive as alternative energy sources. It would complement the planned interval meter (smart meter) roll-out, allowing these pricing principles to be implemented as the smart meters are installed in households, providing a real and practical use for this technology.”

Support package could reduce social impact: “These pricing principles, if introduced with targeted audit and appliance replacement and retrofit programs, adjustments to the broader energy concessions and rebate programs and the introduction of education strategies that help households with practical behaviour change, would go a long way to reducing the social impact of carbon trading and help the community achieve meaningful greenhouse gas emission reductions,” said Duffy.

The Age, 14/8/2007, p. 10

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