“A basic right:” Why energy for cooking, heating and cooling should be free

With the current cost of living hitting low-income earners hard, a leading energy researcher is calling on the Federal Government to provide free energy for all Australian households to pay for ‘essential’, non-discretionary, energy uses – cooking, heating and cooling.

In the current edition of the Australian Quarterly, Dr Bjorn Sturmberg, Senior Research Leader at the Battery Storage and Grid Integration Program at the ANU, argues that a basic energy right (BER) would reaffirm that energy is an essential service to which everyone is entitled.

Withholding these essential energy services because of financial hardship, “has devastating, cascading impacts on other essential rights, such as health, education and employment, social connection.”

Sturmberg argues a Basic Energy Right could be implemented within current billing arrangements, and any electricity consumed in addition to essential services be paid for through existing markets, as they are now.

“Splitting energy consumption into two categories reflects the difference between the value of energy as an ‘essential’ service, for activities like cooking dinner,” says Sturmberg, “and ‘flexible’ uses, such as charging an electric vehicle.”

Basic energy schemes have been implemented in various places throughout the world. In 2019 in New Delhi, the local government made the first 200 kWh of electricity per month free, and provided a 50% discount for uses between 200-400kWh.

In the Northern Territory, the Bushlight program provided First Nations communities with a dedicated electricity circuit for essential appliances, like a fridge, which remains powered even when the household can’t afford to pay for extra energy.

Sturmberg argues that when essential energy uses are sheltered from the market, the market for ‘flexible’ consumption can be more focused than the “current market arrangements that are as blunt and punishing an instrument as interest rates are for shrinking economy-wide demand.”

The cost of providing 9.275 million Australian households with 4 kWh of electricity per day – enough to run the fridge, stove and some heating/cooling – would be around $2 billion per year.

“This assumes a conservative cost of $0.16/kWh including network costs, calculated based on current electricity futures market prices around $80/MWh – which is roughly twice the price that governments have recently bought wind power for – with network charges added as an equal component of costs.”

This is a similar cost to what the government will spend on the $300 energy rebate for all households, which takes effect today. However, Sturmberg argues “the BER would provide certainty of this support being ongoing, and that, as an ongoing policy the BER could be funded through the energy system.”

Sturmberg suggests that the cost of providing an ongoing free basic energy right could be recovered through any number of means, including progressive government taxation.

Alternatively, the billions of government fossil fuel subsidies could be redirected by placing a $50 million cap on fuel tax credits, or procuring the required energy as part of government offtake agreements with renewable energy generators.

Another mechanism could be to impose a government levy on power generators, which are largely foreign owned, by making them contribute to a BER fund “in exchange for the rights to harvest our nation’s resources – renewable or fossilised – and connect to our electricity networks.”

You can hear Bjorn Sturmberg discussing energy equity on a recent episode of the SwitchedOn podcast here.