June 16, 2013

Ergon Energy and Energex will be amalgamated under one board to “reduce duplication” under a proposal announced today by the State Government.

Queensland Energy Minister Mark McArdle said the proposal – which  would see the new body have only one CEO and senior management team – could lead to savings of more than $580 million over seven years.

“Doing this will help the government tackle soaring electricity costs by delivering significant savings that can be passed on to customers,” Mr McArdle said.

He said it would be subject to consultation with employees.

The establishment of a holding company for Ergon and Energex is the centrepiece of reforms recommended by the Inter-Departmental Committee on Electricity Sector Reform (IDC) released today.

Mr McArdle said the State Government established the IDC on May 30 last year to examine cost pressures on electricity prices. It was asked to make recommendations to ensure:

  • Electricity in Queensland is delivered in a cost-effective manner for consumers
  • Queensland has a viable, sustainable and competitive electricity industry
  • Electricity is delivered in a financially sustainable manner from the Queensland Government’s perspective

“The IDC recommendations being released today provide a blueprint for reform that addresses the unsustainable nature of network costs, maximises the potential benefits of a competitive market, and protects vulnerable consumers as the reforms are delivered,” Mr McArdle said.

Mr McArdle said the IDC had found two main cost drivers:

  • Network costs and revenue – These grew by more than 100 per cent between 2007–08 and 2012–13
  • Climate change policies – The costs of these policies are expected to add around 11 per cent to standard residential bills in 2013–14, or around 15 per cent if solar costs are included
Opposition Leader Annastacia Palaszczuk told the ABC today she was concerned Ergon and Energex were being set up to be privatised.

“We haven’t seen any detail and the other concern is, does this fly in the face of competition policy,” she said.

“They have just released a Budget. This was not discussed before the Budget. It appears to me the Newman government is making this up as they go along. They promised to lower electricity prices and it simply has not happened.”