In a speech delivered this morning, the Australian Competition and Consumer Commission (ACCC) has stated electricity prices have risen by more than they should have for ‘a number of unnecessary and inappropriate reasons’.
Speaking at an Energy Users Association of Australia conference in Sydney, ACCC Chairman Rod Sims said Australia’s electricity prices have on average risen by some 90 per cent in nominal terms or 60 per cent in real terms across Australia over the last 5 years.
“The debate about how to address these unnecessary price drivers has recently developed a frustrating and worrying line of argument,” says Mr. Sims “.. we may miss the chance to deal effectively with the real issues.”
Mr Sims identified network costs as having been the main contributor to price increases in all states, accounting for between 40 – 50 per cent of the price
increases over the past five years.
The ACCC says the Australian Energy Regulator (AER), IPART in NSW and other regulatory bodies have been warning for “many years” that flawed regulatory rules, a broken Merits Review process and reliability standards were driving significant and unnecessary increases in the price of electricity for Australian business and consumers.
According to a Sydney Morning Herald article, Australian electricity users are being overcharged by as much as $3 billion due to the poor way the industry has been run.
The Essential Services Commission of South Australia (ESCOSA), recently recommended retail electricity prices be cut by 8.1 per cent for customers on standing contracts. This translates to around $160 off the average electricity bill.
AGL’s response to ESCOSA’s findings has been less than accepting. AGL Chief Executive Michael Fraser, who is also the Chairman of the Clean Energy Council, has said the company will not invest further in new South Australian generation capacity, including renewables. The company has also cut back marketing in Queensland as a result of price cuts in that state and is also considering the same move in New South Wales.
How long it will take Big Energy and government to duke this out and what the final result will be is anyone’s guess. Meanwhile, over 858,000 Australian households have turned to installing solar panels to help rein in rapidly escalating electricity bills - and it’s likely many thousands more will do so.
