The State's economic watchdog has warned that policies to encourage green power such as wind farms are badly flawed and may drive up household electricity bills without good reason.
As Prime Minister Julia Gillard last night talked up the carbon tax at a community meeting at Perth Town Hall, the Economic Regulation Authority dropped a politically explosive report on the real cost and impact of renewable energy sources.
The authority called for a rethink on the subsidies enjoyed by the green energy sector and backed a price on carbon as an efficient way to influence markets.
Energy Minister Peter Collier rejected the finding on the efficiency of a carbon tax but conceded the rush for wind farms and rooftop solar panels was costing the State a fortune for negligible environmental rewards.
Authority boss Lyndon Rowe said the real cost of producing environmentally friendly electricity had to take into consideration the expense of having base-load power stations on standby.
And the cost of upgrading transmission lines to deal with the erratic electricity supply associated with solar panels and wind farms needed to be factored in.
"This is not an argument against renewables, it is an argument about going to renewables in the most efficient way," he said.
In a key finding in its annual wholesale electricity market report, the authority noted renewable energy incentive schemes "will be a major driver of higher electricity prices in WA and impose significant additional costs on consumers".
"The authority is concerned that unless there is pressure on retailers to procure green electricity at the lowest cost, then inefficient costs will be passed on to consumers," the report stated.
"Evidence shows the current Federal and State renewable energy incentive schemes are an expensive, economically inefficient means to achieve the policy objective of greenhouse gas abatement."
Mr Collier said that as a signatory to a national agreement for States to have 20 per cent of power from renewable sources by 2020, the WA Government was required to take the financial pain for what he admitted would be a "negligible" environmental benefit.
"In crude economic terms I agree with what he (Mr Rowe) has said," Mr Collier said.
"It (renewable energy) is three or four times more expensive than other sources. But this is as much about changing community attitudes as anything else."
Sustainable Energy Association chief executive Ray Wills conceded measures to encourage renewable energy generation had pushed up average power bills but denied the increase had been significant.