Effects of Carbon Tax on Electricity Bill to Users (Essay Sample)

Nduati Cathreen
Professor David Juma
Accounting Principles
5 May 2013
Tax Effects
Power purchase agreement is where two interested parties enter into a contract of generating and purchasing of electricity. The two parties are the seller and the buyer. The seller generates electricity to the other party, the buyer, who purchases it. Power project agreement gives detailed information about the quality of the revenue as well as that of the credit. It is also the power purchase agreement that gives the PPA provider a go a head of allocating the non-recourse financing.
Effects of Carbon Tax on Electricity Bill to Users
When deciding electricity prices, carbon tax will greatly affects the prices being passed to the consumer. For example, the carbon tax was to push the electricity prices up by around $150. This was according to the Director of Climate Change policy Mr. Tim Wilson. This burden was therefore left for the users of the electricity to carry. The Center for International Economics suggested that the prices of electricity will increase to $300 per household when emission reduction policy of the government of Australia was to be reduced to 5% from 2000 levels by 2020, which means that carbon tax will drastically increase to 49 dollars by 2020. Without passing the tax burden to the users the respective companies will have no option but to go under.
In Queensland, carbon tax was also to cause the price shoot up for the electricity bill. Those consumers who remained in the regulated tariffs which comprises of about 30% of those in the South East Queensland were to be affected by price increase of about $120 on the tariff 11. This was only for 2013-2014. The increase in price was as a result of increase of the carbon tax. The government of Queensland decided to repeal the carbon tax by July 2014 as per the data where consumers will now be able to save about $116 extra cash as electricity prices will fall. Wholesale energy cost also affects electricity prices together with solar feed-in tariffs which comprises of about 70% of tariff 11 of the residential bill.
Effects of carbon Tax to Residential Users.
When the government repeals the carbon tax, residential users of Queensland will enjoy tariff 11 price cut from 13.6% to 5.4% for the year 2014-2015. If the government could have repealed the carbon tax by July 2014, then the electricity bill for 2014-2015 could have been higher by $76 instead of $192.
Effects of carbon Tax to Business Users.
Using Queensland as an example, the business users will also have higher price of electricity due to high carbon tax. They will have to pay additional 13.3% for the electricity. However, with carbon tax being removed, the business users will enjoy tariff 20 price cut by 5.3%. As a result, they will save around 152 dollars.
When determining the electricity prices, there are ...