Economic watchdog warns of higher electricity prices
The Economic Regulation Authority (ERA) has released a report that forecasts potential rises in electricity costs stemming from new green initiatives.
Currently the ERA is evaluating the efficiency of the Electricity Retail Corporation's costs and electricity tariffs.
The inquiries have been requested by treasurer Wayne Swan and are being conducted to evaluate the effect of the Gillard government's new tax on carbon emissions.
Once completed, the ERA will make a series of recommendations to the government in regards to electricity prices, tariffs and the best approach to implement new measures for consumers and utilities companies.
The initial report has highlighted the real costs involved in making a switch to green energy and supports the decision of the Gillard government to enforce a price on carbon.
Subsidies for renewable energy initiatives may have a follow-on effect that impacts household bills.
By upgrading the existing systems to facilitate the switch and keeping base-load power stations on standby, costs are inevitably incurred by utilities companies.
Clean energy practices require investment and the price is eventually passed on to the consumer through higher electricity prices.
Costs are already incurred at every level of the electricity generation network - from generation to distribution - and retail operations and determine how much the average household pays.