Governments push back on planned power price hikes
Federal and state energy ministers have told the Australian Energy Regulator to re-think its planned hike to power prices, urging it to factor in cost-of-living challenges.
The ministers also sought an ‘interrogation’ of how much revenue and profit energy retailers are bringing in.
Yesterday the Australian Energy Regulator (AER) published its draft ‘default market offer’ (DMO), effectively the benchmark power price in New South Wales, South Australia and south-east Queensland.
For ordinary households on the default offer, prices would lift nearly 9 per cent in NSW, and between 5 and 6 per cent in south-east Queensland and SA.
Most households aren’t on the default market offer and are instead on other retail contracts, but DMO price changes tend to flow through to those other offers.
Energy ministers from NSW, Queensland, South Australia and federal minister Chris Bowen used a meeting today to raise their concerns about the price hikes, and urge changes before the plans are finalised.
“Ministers acknowledged the cost of living challenges facing households and businesses, and in this context expressed concern at the potential impact of the draft DMO published under the existing regulatory framework,” the four ministers said in a communique.
“Ministers encouraged the AER to further interrogate retailer revenues and margins, broader cost pressures across the sector, and to further consider ongoing cost of living pressures in settling the final default market offer.”
Call for scrutiny of retailer costs
AER chair Claire Savage said on Thursday the main driver of the price increases was the costs faced by the retailers themselves.
That includes things like administrative costs of managing customers, advertising, debt management and the rollout of smart meters.
Ms Savage told the ABC those cost increases were actually outweighing costs like generating power, and building new transmission lines.
“The largest driver of the estimated price increase that we’re announcing today is those costs that retailers report to us and the ACCC, so their cost of their own systems,” she said.
“It’s not so much the cost of building the poles and wires, or the costs of generating electricity.”
Energy ministers are particularly keen to see the AER scrutinise those cost increases, and whether it is fair to pass those costs onto consumers.
