ELECTRICITY generators have written to all senators warning that unless the carbon tax laws are amended consumers could face power price rises of 20 per cent in the first year rather than the 10 per cent increase on which the government has calculated its household compensation.
The Energy Supply Association is angry the government plans to force immediate payment for forward-dated emission permits, rather than the deferred payment allowed under the former Rudd government's emissions trading scheme.
The generators' association delivered its warning as the Treasury secretary, Martin Parkinson, said he and his colleagues might have to ''make a choice with their feet'' should the Coalition win office and direct them to dismantle the carbon trading scheme.
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Also, the Coalition warned yesterday that the government's $10 billion Clean Energy Finance Corporation, which will help fund green investment, would ''be a honeypot to every white shoe salesman imaginable''.
The opposition finance spokesman, Andrew Robb, said the fund would be spent on ''all sorts of wild and wacky proposals that the banks would not touch in a fit''.
Mr Robb said he was referring to ''those energy companies who have been critical but who have strong interests in renewables and could potentially be major beneficiaries of these subsidies.'' The opposition would scrap the fund.
The Energy Supply Association says the change from deferred payment means some cash-strapped generators will not be able to afford to nail down their carbon price liability by entering into forward contracts with retailers and big industrial companies and instead power prices will rise as they try to manage their financial risk.
''Our members need to begin purchasing forward permits … if they can't afford to they won't be able to lock in a future price for carbon … and that means prices will rise,'' said the association's interim chief executive, Clare Savage.
Modelling by the economic consultancy ACIL Tasman found that even a 5 per cent reduction in forward electricity contracts could lead to an additional 10 per cent price rise for households and 15 per cent for big electricity users.
''And that's in a single year,'' Ms Savage said. ''You could have two years in a row of that, which would dwarf the carbon price impact.
''It is the Senate's job to fix obvious errors and in our view there is an obvious error in these bills. We have drafted an amendment and … just 20 words and they could fix this problem.''
Dr Parkinson secretary has worked on three versions of the scheme for three prime ministers, heading the secretariat that drafted John Howard's emissions trading scheme, running Kevin Rudd's Climate Change Department and helping draw up the Gillard government's scheme as Treasury head.
Asked in a Senate hearing yesterday whether he would assist a government elected on a policy of rescinding the carbon tax he had helped build, the Treasury secretary said as a public servant he would serve the Australian people through the government of the day.
''Everybody has a choice in front of them,'' he said. ''If they are not prepared to implement the policies the government chooses to pursue, and that government has been democratically elected, then they essentially have to make a choice with their feet.''
On the issue of payment for permits, Ms Savage said the government had ''its head in the sand'' and the Coalition was not advocating the industry's proposed changes either.
The government is proposing to auction 15 million forward-dated pollution permits in 2012-13, and the electricity generators say they would like to buy 10 times more than that but do not have the working capital to pay for the impost immediately.
The Senate will vote on the carbon tax laws next month.
The government is offering loans to generators struggling to find the cash to buy future permits but the generators have criticised the measure because the loans are above commercial rates.
Businesses have also been warning about price rises due to the financial risks caused by the Coalition's promise to repeal the carbon tax. The Opposition Leader, Tony Abbott, said yesterday those claims were coming from companies who could profit from carbon pricing.
Dr Parkinson said the choice about staying in his job might not be his to make. ''Whether I was secretary of the Treasury would be a matter for the prime minister of the day,'' he said.
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