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With Australian energy prices reaching record highs across states, parties on all sides of the political divide are making energy policy a key focus of electoral campaigns. The NSW Labor party, led by Chris Minns, is no exception. Before their recent victory in state elections, Labor made a range of commitments to lower NSW’s painfully high energy retail prices.
Let’s take a look at Labour’s pre-election energy policy commitments in NSW
Labor’s pre-election energy policy commitments included:
- Creating a NSW Energy Security Corporation
- Establishing a $485M Energy Relief Fund
- Establishing a Hydrogen Centre of Excellence
- Building community battery capacity
Out of these commitments, the two with the most potential to directly influence retail energy prices are the NSW Energy Security Corporation and the Energy Relief Fund.
The NSW Energy Security Corporation will support investment in renewable energy assets. Drawing on an initial investment of $1B, the state-owned Corporation will develop partnerships with private enterprise to deliver a more robust and reliable renewable energy infrastructure. For example, it will channel funds into storage solutions like pumped hydro and community batteries to take advantage of rooftop solar generation. In other words, we’re getting closer to renewables, but the pace is snail-like.
Good news for small business owners: The $485M Energy Relief Fund will provide short-term relief to residential and small business consumers in NSW. Eligible small businesses – defined as those with a maximum usage of 100MWh of electricity per year – will receive a one-off deduction of $315 from their energy bills.
How likely is Labor to fulfil its commitments?
Labor has already ear-marked $1B to create the NSW Energy Security Corporation. The funds will be drawn from the existing Restart NSW Fund, which was established in 2011 to support high-priority infrastructure projects. In effect, this means one of the major hurdles to fulfilling the commitment (i.e., scraping together the money) has already been overcome, implying a high likelihood that Labor will follow through with its pre-election promise. Whether the Corporation will meet its objectives of creating a reliable renewable energy infrastructure for NSW is another question.
Labor has yet to announce publicly where the money will come from for the $485M Energy Relief Fund. However, given that providing such one-off relief is relatively straightforward – and that cost-of-living pressures are such a hot political issue right now – Labor is unlikely to renege on this pre-election commitment.
If fulfilled, what effect will Labor’s policy commitments have on energy prices?
The NSW Energy Security Corporation has the potential to address the state’s energy cost crisis in a meaningful way over the longer term. The fact is, retail energy prices are skyrocketing because wholesale costs for fossil-fueled energy are surging in response to global demand. If Labor can address this underlying supply-side issue through more reliable renewable energy sources, it will go a long way to solving the cost crisis facing consumers. Of course, achieving the Corporation’s lofty ambitions is far from guaranteed.
While it is more likely to be fulfilled, Labor’s Energy Relief Fund commitment is unlikely to have any lasting impact on energy retail prices. When customers receive their one-off rebate of $315, it will no doubt feel good – but the feeling simply won’t last. The Energy Relief Fund is like a sugar hit part way through a marathon: it will only postpone the inevitable pain.
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