More lights turned off as electricity prices skyrocket

More lights turned off as electricity prices skyrocket

Laura Rae

If you thought you were already paying a lot for electricity, think again. Australia’s energy costs are among the highest in the world, and they are continuing to grow.

The Independent Pricing and Regulatory Tribunal (IPART) in New South Wales has confirmed more savage price increases for the state’s electricity consumers.

IPART chairman Peter Boxall, says prices should rise by approximately 16 per cent for NSW households from July 1 this year. That translates to an extra $300 a year for the average residential customer.

But increases will vary according to where consumers live.

While the average annual bill for Energy Australia patrons will go up by $338, Country Energy customers will be the hardest hit, with their bills to rise by $381 due to the higher network costs needed to transport power over longer distances.

This translates to an extra $7.32 per week on an average residential customer bill, bringing the total average annual bill to $2,544.

For Central West grazier Angus Rae, this is just another burden on top of a long list of financial struggles.

“A lot of people on the land are doing it tough at the moment. I don’t think the people in the hierarchy, the politicians, realise just how tough people are doing it, how much they are struggling,” he said.

“There is that uncertainty…of what the next electricity bill will contain, and I think that is causing a lot of angst.”

NSW Nationals Party Member for Bathurst, Paul Toole, labels it as “a spiraling situation which is impalpable for everyone”.

A report released by the Energy Users Association of Australia (EUAA) shows the country’s average electricity prices have grown by as much as 40 per cent over the past five years. These latest changes come on top of increases of 10 per cent and 17 per cent across NSW in 2010 and 2011 respectively.

In the latest opinion poll completed by 50 residential participants in the NSW Central West in April, almost 70 per cent had a quarterly power bill between $500 and $1000. Respondents’ attitudes towards the prices varied, with the majority claiming the increased costs are beginning to take their toll.

For Mr Boxall, a number of varying factors are responsible for the escalation in prices.

“Around half of the increase in electricity prices from July 1 is the direct result of rapidly rising electricity network prices. The other half of the price increase results from the introduction of the carbon price,” he said.

“Unfortunately it’s necessary, because retailers face these costs of poles and wires and they also face the increased costs of carbon pricing, and they have to be able to pass them on.”

The NSW Government has been quick to level most of the blame for the increase in electricity prices on the Federal Government’s carbon tax.

A $23 per tonne carbon price is expected to add around 10 per cent to household electricity prices when it is implemented later this year.

“The carbon tax is undoubtedly one of the biggest problems we have facing us and the Federal Government should hang its head in shame,” Mr Toole said.

“It is the people of this country who are going to be suffering, and at the end of the day they will be suffering when they pay their electricity bills.”

State Energy Minister and Liberal party member, Chris Hartcher also attacked the Federal Government for the impact its carbon pricing mechanism is going to have.

“This is a wrecking ball through the entire economy,” Mr Hartcher said.

“It’s an absolute disgrace to see Labor inflict this sort of pain on families and businesses without compensation for the majority of NSW households.”

But Federal Minister for Climate Change and Energy Efficiency, Greg Combet, rejected Mr Hartcher’s criticism, indicating the majority of Australian households will be compensated.

“Tony Abbott has deliberately misled the community about the impact of the carbon price…Any electricity price rise that is attributable to the carbon price coming in is met by the Federal Government paying tax cuts to families, increasing family tax benefits for families with kids, an increase in the single pension, an increase in the pension for couples, payments for self funded retirees,” he said.

Despite this, Orange City Councillor Glenn Taylor insists the Federal Government has failed to properly explain its carbon pricing scheme, which has led to a backlash by the general public.

“I am sure the government has legitimate reasons for why they are introducing it, but I don’t think the benefits have been sold enough,” Councillor Taylor said.

“Overall people are frightened. I believe there’s a lot of issues out there that need to be explained to the general public.”

The Opposition is calling upon the state government to provide financial assistance to NSW households because it has contributed to electricity price rises.

Labor’s Shadow Energy Minister Luke Foley, says the challenge to mitigate price rises lies in the hands of the O’Farrell Government.

“The draft pricing determination released by IPART makes it clear that the state government is responsible for half of the electricity price increases that will take effect on July 1,” he said.

“Instead of assisting NSW families with the price increases he is responsible for, the Premier is waving his hands in the air, refusing to provide any assistance to the overwhelming majority of households.”

And yet it is not just regional NSW households who are struggling, but small business owners as well.

Scott Tracey, proprietor of the Cobb & Co Court Boutique Hotel in Mudgee, is just one of many local business owners who are struggling to make ends meet. While the hotel only has 15 rooms, he says the electricity prices generated from them significantly cut into his profit margin.

“My energy bills are excessive. I cannot believe the increase in prices since last year, the year before, even five years ago. Electricity prices are just eating away at my income, year by year,” he said.

While the carbon tax is one cause for concern, it is not the only factor encouraging electricity prices to rise.

EUAA executive director, Roman Domanski, points the finger at the government for their lack of control over energy companies. He says other countries in the world have greater control over their network monopolies and are not experiencing the same rise in prices.

“The overriding thing that we need to do is address this poor regulation of these network monopolies so they need to be brought to heel,” he said.

“They need to be contained in terms of their excesses, and they need to be given strong and powerful incentives to actually be efficient in the way that they’re operating their businesses and to lift their productivity.”

Councillor Taylor agreed, saying he believes privatisation of the electricity industry is not the path Australia should follow.

“I am fearful for the future because we are now moving down the road of privatising the electricity industry in NSW. We need to keep the electricity industry in public ownership, government ownership, to keep some control over pricing as far as consumers and working people are concerned,” he said.

Mr Domanski said governments need to act in haste and tackle the rising costs of electricity before they get out of hand.

“Governments really need to, as I say, get their skates on and show electricity consumers in Australia that they are capable and willing to deal with these issues, and deal with them sooner rather than later.”

Households are spending an increasing proportion of their income on electricity bills, particularly those in low income, high consumption homes – but there are few suggestions on ways to mitigate further price increases.

Mr Domanski is certain cleaner energy sources including solar and wind power are not the answer.

“Those technologies are much more expensive than the conventional ways of generating electricity,” he said.

IPART’s draft report has also outlined its recommendations to improve electricity policy and affordability.

The report suggests the current emissions reduction schemes be reviewed when the carbon pricing mechanism is implemented, so that unnecessary costs can be minimized.

But for residents in the Central West, these recommendations are a case of ‘too little, too late’.

“The trend is worrying,” said Councillor Taylor.

“Power bills will continue to rise. This is long-term pain, and the pain is not experienced by the government. It is experienced by ordinary people; working people out there who are struggling to pay power bills.”

Angus Rae agreed.

“We can’t keep going on like this for much longer,” he said.

“I would rate electricity prices as the highest and number one concern for rural people, and quite frankly a lot of people on the land are struggling.”

IPART’s final report on price increases will be handed down later in the year.

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