What’s happening with electricity prices?
According to the report, the cost of building new ‘poles and wires’ network infrastructure was responsible for around 50 per cent of electricity price rises over the last five years, and network costs now account for around 40 per cent of household electricity bills.
Replacing ageing poles and wires, on its own, accounted for less than half of this cost. Without decisive action to ensure the networks are as cost-efficient as possible, network costs will push up electricity prices even further.
One way to help networks become more efficient is to reduce ‘super peak’ demand, which occurs on just a few days a year, normally during very hot or cold days.
Around 25 per cent of electricity bills are driven by these ‘super peaks’, because we built infrastructure to meet peak demand and generation is more expensive during peaks. If we reduce super peaks it will help to make electricity affordable, while ensuring that the network is still reliable and households receive the energy services they need.
However, network costs aren’t the only driver of future electricity price rises. Over the next decade the prices electricity generators pay for gas and coal are also predicted to increase, in turn pushing up electricity prices.
This means it is essential to help energy users get more out of each dollar that they spend on electricity. Boosting energy efficiency will help households stay comfortable while cutting electricity bills.
What’s the plan?
The four organisations have drawn on the report to agree on a comprehensive package of essential reforms to make energy more affordable, including:
- Developing a proposal to set electricity distribution network companies minimum targets to reduce spending on new peak-driven infrastructure (poles and wires) through demand side activity.
- Helping consumers to improve their energy efficiency and get more out of each dollar that they spend on electricity.
- A robust system for protecting consumers, particularly vulnerable consumers.
- A stronger role for all consumers in the regulatory system, including a consumer advocacy body; and
- A stronger system for regulating electricity networks, giving the Australian Energy Regulator more powers and the resources to use them, and better incentives for efficient investment.
How can you make your voice heard?
Together, we have said that governments must take action now to reform the electricity market. Some reforms can be implemented quickly and some will take time, but if we don’t start the process now we will lock in billions of dollars in unnecessary infrastructure and higher bills for years to come.
To make your voice heard, you can join our Take the Power Back campaign email your energy ministers and tell them that you want action to fix our broken energy market.
You can also join our campaign by becoming a campaign supporter.