Poles, Wires, & Green Schemes – That’s Why


The ACCC estimates that in 2016-17, Queenslanders will be paying the most for their electricity, followed by South Australians.

That’s one of the key findings of the ACCC’s Retail Electricity Pricing Inquiry preliminary report – And it’s not a shortage of generation, but rather huge amounts spent on poles, wires and green schemes that’s pushing prices beyond the reach of consumers.

The ACCC has published a preliminary report into the electricity market highlighting significant concerns about the operation of the National Electricity Market, which is leading to serious problems with affordability for consumers and businesses.

ACCC Chairman Rod Sims says the main cause of higher customer bills was the significant increase in network costs.

“The main reason customers’ electricity bills have gone up is due to higher network costs, a fact which is not widely recognized. To a lesser extent, increasing green costs and retailer costs also contributed.”

The scathing report comes on the back of months of assurances from the State Government that Queensland is the best positioned State to see stable electricity supplies and prices as it pushes ahead with a 50% renewable agenda by 2030.

The ACCC estimates that in 2016-17, Queenslanders will be paying the most for their electricity.

The ACCC says that it has also heard of many examples of the difficulties that consumers and small businesses face in engaging with the retail electricity market and the particular difficulties faced by vulnerable consumers.

“Many of these issues arise from unnecessarily complex and confusing behaviour by electricity retailers, and in some cases, this appears to be designed to circumvent existing regulation.”

“There is much ill-informed commentary about the drivers of Australia’s electricity affordability problem. The ACCC believes you cannot address the problem unless you have a clear idea about what caused it.”

“Armed with the clear findings on the causes of the problem, the ACCC will now focus on making recommendations that will improve electricity affordability across the National Electricity Market.”.

The Report identifies increased generation capacity, particularly from non-vertically integrated generators, preventing further consolidation of existing generation assets, and improving the availability and affordability of gas for gas fired generation, could all help to take the pressure off retail electricity bills.

The ACCC will also seek to identify ways to mitigate the effect of past decisions.

However, it says many of those ‘decisions’ are ‘locked-in’ and will burden electricity users for many years to come.

Mr Sims says the ACCC will provide recommendations for reform in our final report, which will be provided to the Federal Treasurer in June 2018.

In real terms, average residential bills increased by around 30 % (on a dollars per customer basis) between 2007-08 and 2015-16.

“It’s no great secret that Australia has an electricity affordability problem. What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure.”