Power Price Hikes Greeted With Alarm

May 30, 2014

Today’s recommended Queensland electricity price rises – which look to set to start on July 1 – have alarmed farmers and been slammed by the Electrical Trades Union.

The rises, announced by the Queensland Competition Authority, range from 5.2 per cent to 18 per cent depending on tariff rates, but could be much lower if the Federal Government’s plan to repeal the Carbon Tax goes through.

QCA chairman Malcolm Roberts said that assuming the carbon tax continues, the typical residential customer could expect a price rise of 13.6 per cent or $191 from July 1 (or 5.1 per cent if the carbon tax is repealed) .

The typical small business customer will face a 11.5 per cent increase or $219 (or 3.3 per cent with no carbon tax).

Mr Roberts said the main factors pushing up prices were wholesale energy costs, the Solar Bonus Scheme and network charges.

“The costs of generating electricity are forecast to rise by 21.5 per cent in 2014–15,” he said.

“Generation costs have been relatively flat for many years. However, increasing demand from the LNG industry and higher gas prices are expected to increase generation costs, adding $73 to the typical annual residential bill.

“The cost of the Solar Bonus Scheme will double in 2014–15, adding another $54 to the typical residential bill.

“While ‘poles and wires’ no longer account for the largest increase in costs, network charges will still add $38 to the typical residential bill.

“The QCA will continue to increase the transitional tariffs paid by some business customers in line with the increase in other business tariffs.

“Transitional tariffs offer lower prices than other business tariffs, usually lower than the actual costs of supply. In 2012–13, these tariffs were subsidised by taxpayers by an estimated $110 million.”

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Queensland Dairyfarmers’ Organisation acting President Ross McInnes said farmers would be struck with another big input cost hike if the State Government accepted the QCA recommendations.

The QDO says power bills are now at least 350 per cent higher than in 2000.

It fears some farmers could be paying up to 17.5 per cent more under the QCA recommendations.

“If the State Government accepts this recommendation, it is another cost impost on the input side that is hitting us at the same time that we have market failure on the income side of our business,” Mr McInnes said.

“We cannot recover these additional costs from the market due to the failure being created by the supermarket milk price war.

“The QCA and the State Government need to recognise that they can’t keep imposing these costs when we have no ability to recover them.”

The QDO said the QCA recommendations also meant electricity costs to farmers and other small business customers could rise in some cases by more than 25 per cent above the increases to domestic customers.

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Electrical Trades Union State Organiser Stuart Traill said the increases were “yet another failure by the LNP to deliver on its promise to reduce cost of living pressures for Queenslanders”. 

He said the State Government had refused to consider independent modelling in the Orion Report (758kb PDF) which showed how it could actually reduce power prices by $310 per year.

“We have seen this government make one poor decision after another and now Queensland consumers will be forced to pay for the LNP’s incompetence,” Mr Traill said.

“The LNP continues to refuse to accept responsibility for this price surge even though the Queensland Electricity Act is explicit in giving the Energy Minister the power to set electricity prices.

“In 2012, the government used this power to freeze residential electricity prices for 12 months.  The government now wants us to believe they are powerless to help.”

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The State Government blamed “Labor’s Carbon Tax” for the price rises.

Energy Minister Mark McArdle said the QCA’s announcement “showed the challenge facing Queensland to address Labor’s painful legacy of locked-in costs of electricity supply”.

Mr McArdle said the increase would have been 5.1 per cent if the Carbon Tax was removed, while some tariffs would have actually decreased.

“Getting rid of Labor’s carbon tax is the quickest and easiest way to reduce electricity bills in Queensland,” Mr McArdle said.

“The QCA said two of the main factors pushing up prices are the Solar Bonus Scheme and network charges.

“We are cutting the cost of poles and wires, introducing more competition with customer protections and reforming Solar Bonus schemes.

“We have removed prescriptive reliability standards for electricity distributors which will save Queenslanders more than $2 billion.

“Our reforms to the Solar Bonus Scheme will save Queenslanders $110 million.”

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• Download a QCA Fact Sheet (1.4Mb PDF)

 

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