Regulator says increasing power prices hurting our economy

Australian Competition and Consumer Commission chair Rod Sims says “Everyone pays price for electricity hikes”

In a massive blast at Australia’s power price-setting rules, the Australian Competition and Consumer Commission chair will today tell a national energy conference that some price rises have been “unnecessary and
inappropriate”. Households and businesses have been gouged by illegitimate electricity bill hikes that are hurting the economy, competition tsar Rod Sims says.

Austrailian-money“While there have been legitimate drivers for some increases, prices have also increased for a number of unnecessary and inappropriate reasons,” Mr Sims said. Some rules are slanted in favour of big energy companies, which has resulted in pushing up household bills by about 60 per cent in the past five years.

Three reasons are the focus of the speech, at the Energy Users’ Association of Australia annual conference in Sydney, regarding the current rules and energy price climate. 

They are “weak” rules that set out how the Australian Energy Regulator can limit energy network costs; the ease with which big power companies appeal against regulator decisions; and changes to electricity reliability standards – designed to stop blackouts on hot days – that have pushed up costs.

“The increased cost of electricity has also harmed the competitiveness of Australian businesses and indeed the entire Australian economy,” he said. The ACCC chair said homes in country areas were spending more than 10 per cent of their income on energy costs, but higher bills were hurting Australians across the board.

Companies are now adept at “cherry picking” parts of their cost proposals for review by the Australian Competition Tribunal, after they have been blocked by the regulator.”The decisions of the review body, the Australian Competition Tribunal, have increased the money recovered from customers by approximately $3 billion,” Mt Sims says. Mr Sims also said companies that built and operated poles and wires sending electricity to homes had too much power to propose expensive new spending measures that flowed on to consumer and business bills.

Chief executive Alan Kirkland said that Australia needed an energy regulator that has stronger enforcement powers and it was clear that the biggest factor driving up household bills was over-investment in poles and wires. Consumer group Choice has strongly backed Mr Sims’ calls about the energy costs and regulations.

October 24, 2012

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