Victorian resources and energy minister Russell Northe.

By Cameron Jewell

21 May 2014 — The Victorian government has canned the Victorian Energy Efficiency Target, in a move it says will cut energy bills for households. However critics say the scheme was saving households money and has been axed because it was cutting into generators and retailers’ profits.

The VEET, introduced in 2008 to help homes and businesses save energy, made it cheaper to install energy efficient lights, showerheads and appliances, and also worked to cut greenhouse gas emissions.

The government said the program had become a burden and would be phased out in 2015, with a cost–benefit analysis showing it had delivered a net cost to the economy of $177.6 million. An analysis also found that greenhouse gas reduction from the program had only been eight million tonnes as of 31 December 2012, compared with expected cuts of 16.7 million tonnes.

The costs, however, had been on energy generators and retailers, rather than consumers.

“The benefits accrued by consumers participating in the scheme, while outweighing the costs incurred by non-participating consumers, represent a transfer from energy generators and retailers to these consumers through a loss of profits,” a business impact statement found.

The statement said that while a 2011 report found that the VEET would provide a net economic benefit under all scenarios tested, reduced energy demand overall had led to smaller reductions in energy use through the scheme, and meant that the program was now costing the economy.

The government said continuing the program would cost the economy between $170 million and $700 million over the 15 years from 2015.

“The Victorian Government is committed to delivering practical programs that promote energy efficiency to help Victorian homes and businesses keep their energy bills as low as possible,” Victorian energy and resources minister Russell Northe said.

“The VEET scheme is no longer delivering on those goals in a cost effective manner and the review found that continuing with the scheme would be costly to the Victorian economy.”

The Energy Efficiency Council slammed the move, saying the government was putting big energy companies’ interests ahead of jobs and families, particularly low-income families, to which the program was delivering greater benefits.

“They admit that they’re cutting a program that employs over 2000 people and helps low-income families save energy because it reduces generators’ profits,” EEC chief executive Rob Murray-Leach said. “This decision shows a lack of vision, a lack of leadership, is unfair to families and is economically reckless.”

The Coalition had been responsible for doubling the program when they came to office, however the Energy Efficiency Council said it had become so successful it was now eating into generators’ profits.

Mr Murray Leach also said the business impact statement the government was relying on wasn’t “worth the paper it’s written on”.

“Work by the national Australian Energy Market Commission confirmed that the costs of the VEET in 2013-14 were equivalent to less than one per cent of energy bills (under $12 a year) in 2013-14 and the benefits significantly outweigh these costs,” he said.

“A much more effective national modelling exercise in 2013 found that a national scheme like VEET would deliver $2.2 billion in economic benefits.”

The Victorian Council of Social Service said the move would most effect those on low incomes.

“This decision will leave low-income families with fewer avenues for assistance to put in place efficiency measures to lower their energy bills,” VCOSS chief executive Emma King said.

“Winter is a difficult time for thousands of low income Victorians, who face increasingly unaffordable heating bills but can’t afford the upfront cost of simple efficiency measures that would make their homes more comfortable to live in and cheaper to run.”

The move follows Victoria’s axing of other efficiency programs – the Greener Government Buildings Program and the Environment and Resource Efficiency Plans program.

Victorian Greens leader Greg Barber said the new energy minister was a “captive of the coal industry”, and that greenhouse gas emissions and power bills would rise.