Energy regulator confirms network ‘gold plating’ is the main cause of rising electricity bills
Wednesday, 22 June 2011 13:28
It’s now time to change the rules on electricity pricing, Total Environment Centre (TEC) said today after the Chairman of the Australian Energy Regulator, Andrew Reeves, confirmed TEC’s long-held position that rising electricity prices are due to “gold-plating” – overinvestment in infrastructure by electricity network companies.
“Total Environment Centre’s research has shown that the current National Energy Market regulations provide perverse incentives for transmission and distribution network service providers to game the system, overinvesting in electricity network infrastructure,” said Jeff Angel, TEC Executive Director. In statements made to the Sydney Morning Herald, Mr Reeves has admitted AER is essentially powerless to prevent this reckless spending.
Total Environment Centre, Professor Ross Garnaut, the Australian Industry Group, the Prime Minister’s Task Force on Energy Efficiency, the Independent Pricing and Regulatory Tribunal of New South Wales and the AER have all independently confirmed overinvestment as the primary reason for rising electricity prices.
“It’s time to fix the National Electricity Market,” said Mr. Angel. “There is no longer any doubt: electricity prices are going up because transmission and distribution companies are spending too much of their customers’ money on poles, wires and substations and not enough on demand-side initiatives like demand management and energy efficiency.”
“The only people who disagree with this is the Federal Minster for Energy, Martin Ferguson; and the utilities which are reaping financial gains.”
“Energy efficiency and demand management are more efficient than network infrastructure at meeting peak and rising demand and are a remedy to rising electricity prices in both the short and long term” said Mr. Angel.
“Not only that, demand-side participation lowers the use of fossil fuels and facilitates the transition to an energy system based on renewable technologies. Total Environment Centre, industry groups, research institutions and bureaucrats are all in agreement on the benefits of demand-side initiatives. The task now is to work out how to increase the rate of demand-side participation.”
“Minister Ferguson has claimed, the regulatory framework for Australia’s energy sector is leading-edge.”
“TEC disputes this idea completely. How can a market where monopoly companies control their revenues at the expense of electricity consumers and the environment without any redress from government possibly be called leading-edge?” Mr Angel said.
