Let Them Eat Rebates

Many Bill Hero subscribers will now have seen the first $75 instalment of the federal government's $300 Energy Bill Relief Fund (EBRF) rebate appear in their bills.

Here at Bill Hero HQ, of course we're happy to see some relief for energy bill payers, including ourselves, but we're disappointed about the delivery model.

It's hard to imagine a more regressive approach to alleviating the energy bill problem than giving a free handout to everyone, and doing it in a way that absolutely fails to address any of the fundamentals that caused the problem in the first place.

Sure, $300 is a welcome relief for energy bill payers, but that cash rebate will go to even the very wealthiest bill payers, who will barely notice a single $300 government rebate, let alone the multiple rebates they will receive for each property they own and pay an energy bill for.

The rebate is positioned as an 'energy' solution, but it would make no difference if the money were delivered as Coles or Woolworths vouchers instead. Delivering the credit via the energy retailers is little more than a stunt to make it look like something is being done about retail energy prices.

And having the delivery through energy bills means that apartment dwellers - statistically the people most likely to actually need this kind of support - may be excluded if they are inside an embedded network and do not buy their power directly from an energy retailer.

Energy bill payers will no doubt welcome the $300 energy bill rebate. Here at Bill Hero, we love this too because, yay! Free money!

“I know they’re stolen, but I don’t feel bad. I take that money, buy you things you never had”

But we also see it as a massive waste of money and an even bigger missed opportunity.

Treasurer Jim Chalmers has committed $3.5bn of federal funds to directly deliver energy bill payments to an unchanged marketplace of energy retailers and generators. That $3.5bn is already our money, and it's going directly to the energy industry that's been overcharging us so hard for so long. Should we really be celebrating?

Yay! Free money! But, umm, it's actually already our money anyway

How will the rebate work?

Energy retailers will automatically apply the rebate to electricity bills, so you won’t need to apply or do anything at all to receive it.

You’ll receive $75 off each bill over the 2024-25 financial year if you have a quarterly billing cycle. If you're on monthly bills, a $75 credit will be applied to your account on the 'census date' each quarter - so you can expect to see a $75 credit on every third bill this financial year.

Quarter 1: 31 July 2024 (1 July 2024 for QLD)
Quarter 2: 1 October 2024
Quarter 3: 1 January 2025
Quarter 4: 1 April 2025

The credits will carry over, so if your monthly bill is less than $75, then you'll see a credit balance carried forward into the next billing period.

If you have multiple properties, you'll qualify for the rebate for each of them. Finance Minister Katy Gallagher said on ABC News Radio, the day after the budget that this was the easiest way to provide cost-of-living relief quickly:

We looked at … the best way, the most efficient way, that we could provide that relief over the short term ... in a way that reached more people than concession card-holders

Although literally true, this, of course, is complete nonsense. It may well be 'efficient' to spend money in this way. So too would be to blitz it in a blender.

What might we do instead?

The Energy Bill Relief Fund rebate does nothing to change our energy industry's underlying dynamics, which continue to deliver the high prices we've all been enduring. Any government-level investment in retail energy bill price relief should be focused on supporting household investment in solar, batteries and the related services and technologies that will help energy consumers drive down their energy bill prices permanently.

Energy policy is fraught with complexity and competing agendas. One idea that is gathering serious support across the political spectrum is that a key role of government in the energy transition should be to help support the provision of affordable funding for the significant investments that all households will eventually need to make into solar and batteries, new energy-efficient appliances, and electric vehicles.

Australia already leads the world in rooftop solar deployment, which has been self-funded by households who recognise the energy bill savings benefits. The same kinds of savings will also be possible from batteries, EVs, electricity heating, and hot water appliances, but the direct financial returns to households are not yet as clear as they are for solar, so the uptake rate remains relatively low for now.

Over time, the financial logic will become more compelling and voluntary self-funded uptake will increase as the price of batteries, EVs and other appliances declines due to volume increases and technology 'learning curve' improvements.

The quicker those investments are made, the faster we'll achieve decarbonisation objectives, and in doing so, individual household energy bills will be radically reduced.

Rewire Australia

This idea has been championed by Rewiring Australia with their Electrify Everything Loan Scheme (EELS) proposal.

EELS is an ambitious proposal for the government to provide low-cost and deferred repayment loans to accelerate the 'electrification' of Australian households. The proposal is modelled on the HECS-HELP loan scheme for higher education.

EELS loans would fund projects such as installing solar panels and batteries and upgrading or replacing all major appliances, such as heating and hot water, with efficient electric models.

Households will secure immediate and significant energy cost benefits; collectively, we will achieve rapid emissions reductions, and businesses will benefit from the rapid acceleration in installation projects, funded by loans that need to be repaid only when the property is eventually sold.

Rewiring Australia argues that total energy cost reductions between $3,000 and $5,000 per year is possible for Australian households.

When first launched earlier this year, this proposal was considered ambitious and audacious, not least because of the funding envelope put forward by the Rewiring Australia team:

We’re calling for a $2.8 billion expenditure on budget over the next 3 years (2024 - 2027) to establish EELS and deliver complementary policies to reduce the costs of electrification for consumers and maximise public benefits.

Those numbers may sound high, however our modelling shows that if we ambitiously electrify homes and vehicles now by providing access to finance, consumers will save $1.7 trillion by 2050, and if funded by flexible finance like EELS, the real cost to the budget will be just 1/20th of the consumer savings. In other words, this is a modest investment to unlock a lifetime of savings.

Now that the government has announced a $3.5bn 'investment' into energy bill rebates, that $2.8 bn no longer seems quite so audacious.

Instead of spending $2.8bn on a fundamental reorientation of energy dynamics through mass electrification of Australian homes, we're giving $3.5 bn of public money directly to energy retailers under the guise of consumer bill relief.