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Tuesday, 16 February 1971
Page: 117

Mr Jacobi asked the Minister for National Development, upon notice:

(1)   Is it a fact that the cost of electricity produced by coal fired stations has not increased since 1953, despite a 43 per cent increase in the cost of living since that time

(2)   What was the average cost per kilo-watt hour of electricity in (a) 1953 and (b) 1969.

(3)   Do these figures illustrate the efficiency of State electricity authorities.

(4)   If so, why is the Commonwealth entering this field of power production which is the responsibility of the Slate Governments.

(5)   Is it a fact that two-thirds of the cost of nuclear power arises from fixed charges such as capital cost and interest.

(6)   Do the costs of these factors move com.mensurately with rising costs.

(7)   If so, how can the price of nuclear power become competitive with conventional power which has been shown to have remained constant since 1953.

Mr Swartz - The answer to the honourable member's question is as follows-

(1)   and (2) The actual cost of production of electricity from all Australian coal fired power stations is not available in any published form. The best information I can give the honourable member relates to the average selling prices per unit of electricity. These average selling prices to a great extent reflect variations in cost of production at power stations; in addition however they include costs of transmission and reticulation and the running costs of the electricity instrumentalities. As has been noted by the honourable member the average cost per unit of electricity to consumers has been remarkably stable as shown by the following table:

(3)   1 believe that such stability of average selling prices in the face of rising general costs could not have been achieved except in circumstances where the responsible authorities were highly efficient. Without detracting from this statement however I think it necessary to point out three factors which tend to lower electricity charges. These factors are common to electricity systems undergoing major expansion in many other parts of the world. The factors are:

(a)   economies of scale accrue from the use of larger generating units in respect of capital cost, efficiency and use of the heat content of fuel and operation and maintenance costs. The maximum size of the generator unit is related to the size of the system and therefore in a growing system costs should improve provided the expansion rate is sufficiently high to counteract inflation.

(b)   Usage of electricity per consumer is increasing. However revenue tends _ to increase at a greater rate than expenditure as the cost of reticulation systems and overhead costs remain relatively stable despite a greater throughput of electricity. I might add that the statistics quoted above conceal the fact that most electricity tariff schedules have risen; but as a significant part of the total sales is made under tariffs which have a sliding scale according to the quantity used the average selling price does not increase as much as increases in the rales in the tariff schedules.

(c)   Technological advances have been made in the design of plant and in high voltage transmission. The first has resulted in cheaper and/or more efficient plant additional to those benefits arising from increased size; the second has permitted the location of stations adjacent to coal fields and has reduced fuel costs.

(4)   It is acknowledged that power production is primarily the responsibility of State Governments. In special circumstances however where major national interests are involved, such as the Snowy Scheme and the proposed Jervis Bay project, the entry of the Commonwealth into this field is warranted.

(5)   The capital and interest components of the total cost of production of electricity from a nuclear plant depends on the type of reactor involved. In the case of natural uranium fuelled reactors the component could exceed 2/ 3 ids of the total cost.

(6)   In the long term capital and interest costs move commensurate with other costs but in the short term labour .costs move much faster. Labour costs represent a fairly small component of generation costs in conventional stations and a smaller, component still in nuclear stations.

(7)   Conventional power stations in Australia's Eastern States are very advantageously placed for fuel, water and proximity to load centres. Accordingly 1 think it will be some time before nuclear stations are competitive with conventional stations in this area. Such a competitive position however might well be reached in Australia before the endof the century. Nuclear power is already competitive in major industrial countries overseas which have passed through the stage of the favourable circumstances we at present enjoy. My reasons for this view are:

(a)   as shown above the rapidly increasing size of our electricity systems will enable the size of generation unite to increase: cost reductions with increasing size occur far more rapidly in nuclear units than in conventional units.

(b)   Conventional stations have been developing over a long period and the scope for further technological development is becoming limited: nuclear power is a relatively new field still possessing considerable room for further technological advances.

(c)   Some increases in the costs of coal into generating stations may be expected as less advantageously placed deposits have to be resorted to.

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