Many Australian households are struggling with rising electricity pricesThey often have to decide between paying the utility bill, buying food or keeping a roof over their heads, a parliamentary inquiry has found. Of the 10 million electricity customers in Australia, 88 per cent are residential, and many have to make hard budgetary choices, just to keep afloat.
The Senate committee charged with examining the reasons behind a 40 per cent hike in prices over the past three years handed down a 200 page report on Thursday calling for the establishment of a national body to advocate for consumers. It also recommended consumers be given the choice of switching off during peak demand times when electricity costs soar, and that the Australian Energy Regulator (AER) be given greater powers.
The report also stated that lower income households, including young families, were spending more on electricity and might have little room to use less power during peak periods. “Young families on low incomes are particularly hard hit by electricity costs,” it said. “Many Australian households are finding it difficult to absorb the additional cost of higher electricity bills and are being forced to make challenging decisions about the allocation of household income to essentials such as rent, food and utilities. “
Businesses have a far greater us of electricity in Australia with households using just 27.7 per cent of the electricity generated, and the remainder being taken up by business. The four major factors affecting prices were industry labour costs and executive salaries, dividend payments to state government utility owners, unnecessary infrastructure spending or `gold plating’ and “opportunistic” profit-taking by operators. These are challenging factors to address by the committee because there was not enough information about their exact contribution to price rises.
Each year the AER delivers a state of the energy market report breaking down the exact components and contributors to electricity price, this information is taken into account for planning.
“The recommendations of the committee, if adopted, will put an end to gold-plating of assets by network businesses, will save consumers hundreds of dollars on their electricity bills and will improve energy efficiency,” committee chair and Labor senator Matt Thistlethwaite told parliament. It also proposed a national consumer advocacy body to represent the views and interests of consumers in the National Electricity Market regulatory process and to provide simple information about the market and pricing.
Suggestion from the committee included a three-tier pricing model under which small to medium consumers would pay a flat network tariff, unless they opted to install smart meters which make it easier to manage power use. “Transitioning to cost-reflective pricing in this way should help to ensure that low income and vulnerable consumers are not adversely affected in circumstances where they are unable to shift their electricity consumption away from peak periods,” it said. 1 Nov 2012
Read more about power prices for Australians