Electricity prices heading in one direction and causing just as much hysteria

CHOICE says action to reform energy market is long overdue

CHOICE says today’s draft determination on NSW electricity price rises continues the cycle of sharply rising costs driven largely by infrastructure spending.[1]

The average 16 per cent increase follows a 17 per cent increase from last July, with the latest rise around half from spending on poles and wires, and half due to the carbon price.

“The most concerning factor is the continuing multi-billion dollar splurge on electricity infrastructure, a trend which has gathered pace in recent years and shows no sign of stopping,” says CHOICE head of campaigns, Matt Levey.

“While the carbon price is a major factor, it is largely a one-off impact with some compensation, while there is far less scrutiny around the endless expansion of poles and wires.”

CHOICE is calling for reforms to Australia’s electricity market to break the cycle of rising infrastructure costs, including measures to cut peak electricity demand and greater scrutiny of costs before they are passed through to household bills.[2]

The people’s watchdog is also calling for greater assistance to help households reduce their energy consumption, including through a national Energy Savings Initiative.[3]

“At the moment, we have an electricity market which at almost every stage is set against consumers’ best interests, from generation, through distribution networks to the retailer. At the same time we have governments at every level talking about the need to reduce household bills.

“This latest set of price increases shows the time for incremental change is over. We need some bold reforms to create an energy sector that puts reduced demand and fairer prices above increased spending on poles and wires," says Mr Levey.

Read more on CHOICE's Carbon Calculator.

Media contact:  Matt Levey, CHOICE head of campaigns – 0488 214 066

[1] Electricity prices are projected to increase an estimated 30% nationally by 2013/14 (see Page i of http://www.aemc.gov.au/market-reviews/completed/possible-future-retail-electricity-price-movements-1-july-2011-to-30-june-2014.html ). The main driver of price rises is network costs, the multi-billion dollar price tag of expanding and maintaining the poles and wires that carry electricity from the power generator to our homes. There is $55 billion worth of this spending already locked in, and it was recently estimated that on a national level, network costs would contribute about 40% to increases in electricity prices from 2011/12 to 2013/14 (see Page 6, table 2 of http://www.aemc.gov.au/market-reviews/completed/possible-future-retail-electricity-price-movements-1-july-2011-to-30-june-2014.html )

 [2] See http://www.choice.com.au/media-and-news/media-releases/2011%20media%20releases/energy-rules-must-change---consumers-and-big-business-agree.aspx

[3] CHOICE is on the Advisory Group looking at the development of a national Energy Savings Initiative. See http://www.climatechange.gov.au/government/initiatives/energy-savings-initiative.aspx

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