A former member of the consumer watchdog warns households will be disappointed if they think power prices will come down after the carbon tax is abolished.
Clive Palmer’s audacious bid to ensure households play less for electricity after the carbon tax is abolished may be an empty gesture.
Mr Palmer is insisting the Abbott government’s repeal legislation include tougher penalties on energy companies and possibly other businesses that do not pass on savings to consumers.
Palmer United Party senators voted with Labor and the Greens to foil government attempts to abolish the tax in the Senate this week.
But a former member of the Australian Competition and Consumer Commission (ACCC) has dismissed the PUP amendments as “populist hokum”.
Nor is academic Stephen King impressed with the government’s plan for the consumer watchdog to monitor energy prices and impose penalties where necessary.
“If you’re expecting to see your power bills go down when the carbon tax is eventually repealed … get ready to be disappointed,” he wrote on The Conversation website.
That’s because retail electricity prices are either set by a regulator or the market.
When the carbon tax is repealed regulated prices, which apply in Queensland, NSW, the ACT and Tasmania, are expected to be adjusted for the reduction in cost.
“However, this may not occur immediately,” the Monash University professor said.
Prices would be changed at the next “reset” unless the regulator made provision for the potential removal of the carbon tax the last time it set prices.
“So there is little point in having either the ACCC monitor this process or electricity retailers explain it,” Prof King said.
Any delay depended on the regulators, not business exploitation.
In Victoria and South Australia, where the market determines prices, ACCC monitoring was unlikely to make a real difference.
The PUP amendments and push for ACCC price monitoring were an attempt by politicians to claim credit for changes that will happen anyway, Prof King said.
He warned price monitoring would be an implicit regulatory burden that would be reflected in the price households pay for electricity.
“So if you are expecting the repeal of the carbon tax to lead to lower power prices, don’t hold your breath.”