The Queensland Government yesterday directed its electricity network business Energy Queensland to remove the cost of the Solar Bonus Scheme from its charges until 2020, which will reduce Energy Queensland’s earnings and hence adversely impact the State Budget (see the media release). So, for the next three years, the huge cost of the Solar Bonus Scheme, introduced in 2008, will now be paid for by taxpayers, rather than being cross-subsidised by other electricity consumers without solar. Average electricity bills will be lower than otherwise, but, of course, there is a large overlap between taxpayers and electricity consumers, so there is a large degree of smoke and mirrors here.
The Government’s decision is expected to adversely affect the State Budget and hence taxpayers by $770 million over three years, as reported in the Brisbane Times:
While electricity bills will be lower than otherwise, the adverse budgetary impact means Queenslanders will need to endure higher taxes and charges, either now or in the future, than otherwise.
The Solar Bonus Scheme’s overly generous 44 cent/kWh feed-in tariff, available to households which installed solar PV cells before July 2012, will last until 2028. This is much longer than households will have needed to recoup their investment in solar PV cells, delivering a “financial windfall” to many households, as the Queensland Productivity Commission found last year (as reported by Mark Ludlow in the AFR in February 2016).
Unfortunately, the Queensland Government rejected the QPC’s recommendation to abolish the Solar Bonus Scheme. This was disappointing. It is a highly inequitable policy adversely affecting lower-income households. Even though its impact has now been removed from electricity bills, meaning average annual regional electricity bills will go up only by $50 rather than $100, households without solar will still end up paying somehow, through higher taxes and charges, now or in the future, than otherwise, as noted earlier. The Bligh Government’s Solar Bonus Scheme, introduced nine years ago in 2008, is just another example of how poor policy decisions can have long-lasting adverse impacts.
Hat tip to Joe Branigan who alerted me to this announcement and prodded me to comment.