Environment

New year rings in 41 per cent rise in GreenPower prices

Consumers want answers after energy providers have announced a price increase of up to 41 per cent for their green energy contribution to coincide with the new year.

Russell Mills with a selection of his Origin Energy electricity bills.
Russell Mills with a selection of his Origin Energy electricity bills. Photo: Jacklyn Wagner

In the days leading up to Christmas, Origin Energy customers were notified that "a rise in the market price of renewable energy" meant GreenPower electricity charges would increase from 3.61¢ per kilowatt hour (excluding GST) to 5.10¢ per kilowatt hour from January 1, 2016.

The increase was so steep, northern NSW resident Russell Mills was sure there had been a mistake.

"I did the maths very quickly and it came up as a 41 per cent increase. I thought that's substantial, am I missing something?" he said. 

"There was nothing in the letter explaining the rationale for it, so I rang them and I spoke to three different people who could tell me no more, just that it was due to changes in renewable energy prices."

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In Mr Mills' case, the 41 per cent increase would equate to an extra $77 each year.

GreenPower is government-accredited renewable electricity from a source such as wind or solar-powered built since 1997. 

Providers purchase large-scale renewable energy certificates on their customers' behalf to offset the power they use in any given year, therefore increasing the amount of renewable energy in the national energy grid.

Consumers who choose GreenPower electricity as an add-on to their bill can select a percentage of their electricity usage to be matched into the grid with electricity from accredited renewable GreenPower sources.

More than 32,500 organisations around Australia purchase accredited GreenPower.

Mr Mills lives with his wife and two children in a three-bedroom home in Clunes, where they spend between $450 and $550 per quarter on electricity.

For the past year, he has contributed to renewable energy through the 100 per cent GreenPower product. However, after being hit with the 41 per cent increase, he has made a "hip-pocket decision" to reduce his 100 per cent contribution to 50 per cent. 

"There's a huge disincentive here for average consumers to actually choose renewable energy. I'm not laying blame totally on Origin, I'm still with them, I just feel it's a bit depressing really," he said.

"We need more renewable energy and there's not really any incentive for us to choose it."

Significant price jumps in GreenPower charges can be linked to the large-scale generation certificates used for the product, which have experienced a steady increase of about $40 to upwards of $75 in the past six months.

All GreenPower providers have changed their prices to reflect the underlying cost increase.

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Large-scale generation certificates are traded through the wholesale market and prices fluctuate considerably, determined largely by supply and demand.

Origin Energy notified customers of the price increase within 10 days, subject to the terms and conditions of their electricity contracts. 

It is understood the price increase in GreenPower does not equate to a similar increase in a customer's power bill.

An Origin Energy spokesman said the price of GreenPower remained competitive and reflected "the costs associated with making them (the products) available to customers".

"Origin is Australia's largest provider of GreenPower products, offering a range of options for customers to make a voluntary contribution to emissions reduction," he said.

"While GreenPower charges have changed due to an increase in the market price of renewable energy, Origin's GreenPower products remain competitively priced."