Carbon Legislation Update

by Energy Action | Jul 03, 2014
The Palmer United Party’s (PUP) announcement on 25th June that it will support the Government’s pending legislation effectively seals the fate of the carbon tax.

With the new Senators taking their seats on 7th July, pushing through the required Clean Energy legislation will be the Government’s top priority.

What does it mean for energy customers and their energy contracts?

Carbon exclusive contracts
For those customers purchasing energy under a carbon exclusive contract the cost of the tax will drop out of their bill in its entirety once the legislation comes into effect. Precisely when this will be is still uncertain, but when it does happen the customer will get the full benefit of the pass through. With carbon currently being priced under the legislation at $25.40/tonne CO2e (or approximately $22.86/MWh on an energy consumed basis) this represents a significant saving.

Carbon inclusive contracts
For customers on carbon inclusive contracts the position is less clear. Whilst the ACCC has been tasked with policing price reductions stemming from the abolition it is down to the retailers as to how they will implement this. Contract terms for the handling of the abolition under carbon inclusive contracts will vary from retailer to retailer so it is not possible to give a definitive answer as to how this will work. 

Uncertainty still surrounds the electricity agenda…

Regarding the Government’s wider agenda for electricity, this remains clouded by uncertainty. In announcing its decision to support abolition of the carbon tax the PUP also stated that this would be conditional upon the Government scrapping its ‘yet-to-be-passed’ Direct Action scheme, under which the government would have paid individual polluters for reducing their emissions. As the funding of this scheme was never linked to the energy consumer there will be no actual or prospective savings to the consumer if it is abandoned. How the Government may seek to revive the Direct Action scheme, if it does so at all, is still unknown. 

Energy Action will endeavour to keep it's customers updated as clarity arises, particularly in relation to any impacts to your energy contracts.