Michael Fraser, Managing Director of AGL has told the ABC that, although the cost of energy production is at a low point, energy prices have increased recently because of the very significant investment in infrastructure to cope with forecast increasing demand.
The infrastruction in question is poles and wires and not power stations. Mr Fraser also said that AGL sess no need for any new coal or gas-fired genearation before the next decade.
In fact, demand is significantly falling due to:
- the slow down in manufacturing
- the high uptake of domestic solar PV and
- improved energy efficiency in response to increased prices.
Mr Fraser explained that, under the current regulatory system, when demand falls, unit prices are increased to cover the fixed, and rising, cost of infrastructure.
He said that, if a future Tony Abbott-led governemt aboloshed the carbon tax, as promised, he would like to think that they would move quickly to replace it with carbon trading.