Yesterday, I lost a debate that I thought I was absolutely going to win. I did not win.........but I should have.
I figured you might be interested in what I said because it was about the future of electricity bills and who pays them.
The debate topic: “Energy is a public good, so network costs should be paid by public taxes”
Audience: About 300 people at the annual Energy Consumers of Australia conference in Sydney.
Moderator: Craig Reucassel (from The Chaser and other stuff)
A federal treasury document published 2 months ago called the “Tax Expenditures and Insight Statement” found that between 55% and 80% of “revenue forgone” by the Australian Tax Office in 2024/25, was attributable to tax deductions claimed by the top 20% of taxable income earners.
This amounted to $110 BILLION dollars for less than 5M people. It was primarily made up of Superannuation Concessions, Capital Gains Tax Discounts and “Rental Losses” – otherwise known as “Negative Gearing”.
For this reason to begin with, it is simply unfair for the cost of our electricity networks to be met by public taxation.
How does it make sense to use a system that so clearly favours high-income earners to spread the cost of our electricity networks more equitably? The highest income earners have demonstrated that they are more able to to minimise the amount of tax they pay than everyone else.
The opposition’s proposal would at best hand the top 20% of income earners thousands of dollars every year in lower electricity bills. At worst their proposal would make the housing crisis even worse.
Why?
Because the top three tax deductions (Super Concessions, Capital Gains Tax discounts and Negative Gearing) are most often used by individuals to invest in housing. In fact, these mechanisms encourage housing investors to take a loss on owning a home in the hope of making a motza on flipping the home.
This pushes housing prices up as investors look for profit. But I am pretty sure everyone here is familiar with this story.
So, No, let’s not pay for our electricity networks with our taxation system, it is fundamentally a bad idea.
Making things fairer is a good idea though. What does fair even mean here? I argue that fair means that those people who use more of the resources of the electricity network, should pay more.
Actually more. Not deductible more.
The electricity network’s resources are not used up by moving electricity. Moving electricity doesn’t wear it out. The resources of the network are used up by people with powerful machines crowding out other people from getting electricity into and out of the network.
And because everyone needs electricity, the network companies spend money to make sure people are not crowded out. Electricity costs go up whenever the network companies spend money.
Those people with the powerful machines that barge in all over everyone else are causing electricity prices to go up. Thing is, these big machines are the things we need to reduce our carbon emissions.
Heat pumps, EVs, Solar, Batteries, Induction cookers.
Regulators know this already and introduced demand charges to try and stop the overcrowding. But demand charges punish normal people for very normal electricity use. A fairer system would be one of upfront, informed agreement and THEN enforcement if required.
The nice thing is, all of these powerful machines are not things you buy at the shops. You buy toasters and kettles at the shops, you don’t buy EV chargers and Solar systems.
These powerful machines are sold, installed and sometimes operated by technical people who understand exactly how powerful they are. So my argument now (and for several years) is that the people selling, installing and operating these powerful machines should be made at least partially financially responsible for the crowding they create, or alleviate.
You can’t ask the average consumer to be financially responsible for something that they have little chance of easily understanding. But you can hold responsible those who MUST understand if they are going to run a business selling, installing or operating powerful machines.
“Surely this would be very hard to build, very costly, and we would need to completely rebuild all of the electricity system rules and everything….” – I can hear you thinking.
No. This exists already, and has for three years. It is all around you right now if you are in Sydney. Consumers from multiple retailers are regularly added to it. It has won an award from the Energy Networks Association. It was inexpensive to build, and it isn’t costly to operate. It required a single, small rule exemption.
It is Project Edith. It was built by my company (Reposit) in collaboration with Mark’s company (Ausgrid). We did it for lots of reasons Finding a fairer way to pay for the electricity network was one of them.
Type it into Google – Project Edith – you’ll find plenty of information about how it works, that it does work, and where the project is at.
Project Edith is based upon continuous agreement between the parties that actually can meaningfully agree on technical things. Project Edith holds the right people accountable. Project Edith creates the right incentives for the owners of powerful machines. Project Edith is fair.
And unlike the tax system, Project Edith ensures that those who use more of the electricity network’s resources PAY MORE, NOT LESS of the increasing cost of our changing electricity networks.
Did I convince you? Have your say here.
P.S. If you you are interested in being part of Project Edith - have a look at Reposit's No Bill product. Every No Bill customer in Sydney is added to the project and contributes to its success.