Given the dire nature of the current energy crisis gripping the state, the government needs to urgently institute demand side solutions to encourage Tasmanians to reduce power usage in order to conserve our energy reserves as Hydro power will need to be used each and every day to meet peak energy demand. In order to achieve this a variety of strategies will need to be deployed.
It is also clear that we should minimise the expense and environmental impact of burning diesel to generate electricity whenever possible.
As part of that effort Unions Tasmania offers this proposal to the Government for consideration. In developing this proposal the following key principles were considered;
some users may be unable to reduce power safely,
prices for consumers should not rise, and
users should be encouraged, rather than forced to reduce both overall and peak time usage.
The current pool price for wholesale electricity generation in Tasmania averages around 24.5 cents per Kilowatt Hour (or $245 per Megawatt hour). This reflects the cost of generation only and does not include the costs of transmission and retail.
The regulator has set the price for Hydro heat (Tarriff 41 and 42) at 15c per Kilowatt hour (or $150 per Megawatt hour). This tariff covers the use of heat pumps and hot water. Demand for energy under this tariff is significantly higher in winter.
The regulator has set the price for afternoon and off peak power (Tarriff 61 and 62) at 11.5 and 12.3 cents per Kilowatt hour respectively (or $115 to $123 per Megawatt hour). This tariff is for all power used on off peak circuits.
The addition of diesel generation into the network has now created the situation in which power used under tariff 41 & 42 (Hydro heat) is currently costing the taxpayer roughly $95 per mWh. The use of off peak power will on average cost taxpayers $122 to $130 per mWh. It is also clear that the repair of Basslink will not negate the need for diesel generation and the state will be reliant on this source for some time.
Unions Tasmania Proposal:
Households should receive a rebate of 5c per Kilowatt hour for every kWh less they use than in the same billing period for the previous year on tariff 41 and 42 (Hydro heat). This would send a clear price signal that encourages a reduction in power use.
Households should receive a rebate of 7c per kilowatt hour for every kWh less they use than in the same billing period for the previous year on tariff 61 and 62.
The government should fund and launch an immediate campaign to educate Tasmanians about the need for both peak load and overall power use reduction, and the methods that can be utilised to achieve this.
Advantages of the proposal:
It incentivises households to reduce their energy consumption without penalising those that are unable to do so.
It provides a real and tangible cost saving to the Tasmanian government.
It will assist to protect our energy reserves (water in dams) and increase the rate at which the reserves are replenished.
It will limit the amount of power that needs to be created through expensive and polluting diesel generation.
It will allow a shorter rental period for the diesel generation units.