Power price threat to farmers

Electricity prices set to spike after government challenge


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NSW Government's challenge to limits on power bills looks set to allow network to bill for a higher proportion of their maintenance and infrastructure costs.

NSW Government's challenge to limits on power bills looks set to allow network to bill for a higher proportion of their maintenance and infrastructure costs.

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Electricity prices are set to spike following NSW government's challenge to the industry watchdog

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PRICE hikes on power bills are back on the agenda, following a government-backed challenge to last year’s ruling from independent watchdog, the Australian Electricity Regulator, to reign in prices.

Networks NSW appealed to the Australian Competition Tribunal against the AER’s action to limit electricity costs, seeking to charge higher costs to consumers.

The Tribunal is yet to make its determination, but it accepted some of the networks’ challenges over operating expenses, which could lead to higher costs being placed on consumers.

The AER ruled in 2015 to limit the costs electricity providers could recover from consumers for maintenance and upkeep of their networks, amid widespread allegations that electricity providers had “gold-plated” their infrastructure to free their hand to charge higher prices. 

Regional customers, who are serviced by Essential Energy, saw costs fall by up to $300, based on annual power rates, while metro customers received breaks up to $150.

AER chairwoman Paula Conboy said it was too early to estimate the impact of the Tribunal’s decision, but was reported saying consumers would now likely pay more. The AER will consider a challenge to the tribunal’s ruling.

“The Tribunal found we were correct to conclude that the electricity distribution businesses in NSW and the ACT were not operating as efficiently as other networks, so consumers were paying more than necessary for safe and reliable electricity and gas,” Ms Conboy said.

Farmers, and Irrigators in particular, would be amongst the hardest hit if network prices rise. Electricity tariffs, based on peak as opposed to average power consumption, targets the highest  usage for a half-hour window.

NSW Irrigators chief executive Mark McKenzie said the Tribunal’s could lead to a return to the “bad old days of excessive charges”.

“Because there is currently no difference in peak or shoulder tariff charges, farmers have unsustainably high electricity tariffs regardless of whether they irrigate and use electricity in peak or off-peak periods."

Cotton Australia general manager, Michael Murray urged to the Tribunal to consider the future costs to industry.

“Farmers have put up with rampant year-on-year electricity charge increases for too long.”

“Even worse, the electricity networks have the option to recover any discount that flowed from the AER’s original decision, and it is almost certain they will do this and increase charges to consumers over the short term.” 

NSW Labor’s Energy spokesman Adam Searle linked the government’s challenge to the AER ruling to the ongoing sale of electricity networks.

“Premier Baird is focussed solely on achieving the highest sale price for the electricity network no matter the cost to families and businesses,” he said.

“Government has spent millions on top-end lawyers as part of the court challenge.”

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