Australian Carbon Tax Not Too Burdensome On Energy Bills - Origin CEO

By Ross Kelly
Published Dow Jones Newswires

SYDNEY -(Dow Jones)- Australia's carbon tax won't have a significant impact on the country's household electricity prices, which will remain competitive with those in other developed countries, the head of Australia's biggest energy retailer, Origin Energy Ltd. (ORG.AU), said Thursday.

In a speech at a business lunch in Sydney, Chief Executive Grant King said Australians typically pay about A$1,200 a year for electricity. About 54% of that comprises network costs, which have been increasing significantly over the last few years.

Wholesale costs account for 36% and retail costs for the remaining 10%.
"We expect that increased network costs that have driven increases to date have peaked and will moderate over the next few years," King said.

Wholesale costs are expected to be pushed up by the price of coal and gas increasingly reflecting export parity pricing, Australia's mandatory renewable energy targets, and the proposed carbon price.

While the proposed carbon price of A$23 per metric ton could result in a 50% increase in wholesale electricity and gas prices over the next 3-5 years, these costs comprise a relatively small percentage of bills, King said.

"We agree with government estimates that a carbon price of A$23/ton will lead to a 10% increase in the retail cost of electricity or about A$2.30 per week," King said.
"One should bear in mind that over the 5 years or so in which these effects will occur, household incomes are expected to rise on average by 4% a year, or simplistically 20% over a five year period. On this basis we think it unlikely that the cost of household energy will become significantly more burdensome on consumers."

Australia's proposed carbon pricing scheme was passed this month by the House of Representatives, assuring an easy passage into law. After 3 years the tax will transition into a carbon emissions trading scheme.
Copyright © 2011 Dow Jones Newswires


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