Carbon Tax Issue May Lead To A 20% Power Price Hike

The Energy Supply Association is concerned that a small part of the carbon tax laws may cost them more money upfront — and as a result, add nearly 20 per cent to electricity bills.

The Sydney Morning Herald reports on the problem, which relates to the fact that the new plans would force immediate payment for forward-dated emission permits, rather than the deferred payments that were permitted under the previous emissions scheme; in other words they've got to pay upfront what they used to be able to put off. The report quotes the Energy Supply Association interim chief executive, Clare Savage as saying that

Our members need to begin purchasing forward permits... if they can't afford to they won't be able to lock in a future price for carbon... and that means prices will rise. It is the Senate's job to fix obvious errors and in our view there is an obvious error in these bills. We have drafted an amendment and … just 20 words and they could fix this problem."

It appears to essentially be a cash flow problem; the report notes that the government's plan is auction 15 million forward-dated pollution permits in 2012-13. The electricity generators say they'd buy 10 times more than that — but they don't have the working capital to pay for it immediately. [SMH] Image: ddebold

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