Urgent Inquiry Needed into Victorian Electricity Prices

Tuesday, 09 November 2010 11:41

 
Victorian families deserve a better deal from the Australian Energy Regulator (AER) which has locked-in higher electricity prices and ignored the environmental and economic benefits of energy efficiency, Total Environment Centre (TEC) said today.

TEC has called on Premier Brumby to urgently hold an independent inquiry into the biggest cause of unnecessary price rises triggered by poor regulation of electricity companies.

“The root causes of the systemic over-building of the grid at the expense of power and carbon prices must be uncovered and rectified,” said Executive Director of TEC, Jeff Angel. “Consumers are paying four times the cost of inefficiently meeting increasing demand when ‘poles and wires’ are built instead of pursuing energy efficiency, yet the AER has decided to allow only 0.6% of power company budgets to be spent across Victoria on smart solutions.”

Two weeks ago the AER released its Final Decision on the next five years of spending by Victorian distributors, which will be paid for by Victorian electricity consumers. They have been allowed to spend over $2.5  billion on making the electricity network bigger, and a further $1.2 billion on upgrading the already oversized grid, but only $22 million on energy efficiency.

“The AER are proud of the fact that they rejected distribution companies’ demands for a 70% increase in capital expenditure, but they still allowed a 45% increase on what was spent over the past five years. They claim this will only result in a slight increase in electricity bills, but electricity prices are already unnecessarily hurting consumers for the wrong reasons. The extra spending will only increase the carbon debt Victorians will owe later. If the AER had forced the power companies to invest in efficiency, they would have saved billions of dollars and helped to prevent future spiraling prices for consumers.”

“The real culprits are the Energy Ministers and the flawed National Energy Market Rules which they refuse to change,” said Mr Angel.

Under the National Electricity Rules, transmission and distribution companies make money by selling more and more electricity, not less. This is at odds with other countries like the US. In California energy companies are compelled to implement energy efficiency before forcing consumers to pay for otherwise unnecessary infrastructure. This also works against Federal and State Government energy savings policies.

 “Just as Premier Keneally has done in NSW, John Brumby should now call for an independent inquiry into network electricity price rises in Victoria. An inquiry will reveal the flaws in the Rules and the overriding policy mistakes being made, and show the government how best to change them.”