The 2022 energy crisis: Fuel poverty and the impact of policy interventions in Australia's National Electricity Market

Abstract

The war in Ukraine and associated 2022 energy crisis had far-reaching effects, with seaborne prices for coal and gas reaching multiples of their historic averages. While Europe was the epicentre, countries as far away as Australia were impacted. Governments across multiple jurisdictions have since orchestrated very material energy subsidies for households to reduce the adverse effects, with fiscal estimates across EU member states ranging from 0.5 to 7% of GDP. As a major energy exporter, the Australian Government took a different policy pathway by targeting the source of electricity tariff increases, viz. imposing price caps of $125/t and $12/GJ for coal and gas, respectively. Some state governments in Australia also revised their household energy hardship policies. This article analyses the level of fuel poverty before- and after- the array of Commonwealth and State policy interventions. Commonwealth policy had the effect of moderating forecast electricity tariff increases from 35% to 16.5%, which benefits all customers. However, State Government customer hardship policy remains vitally important and makes the dominant contribution in reducing fuel poverty.