Wednesday, 9 August 2017

This is what privatisation did to Australia's household electricity bills

When three eastern and one southern state formed the National Electricity Market in December 1998 Australia had the lowest retail prices in the world along with the United States and Canada.

The rules which underpin this National Electricity Market are created by the Australian Energy Market Commission (AEMC) set up by the Council of Australian Governments (COAG) - through the COAG Energy Council - for that purpose and to advise federal & state governments on how best to develop energy markets over time.

The Australian Energy Regulator (AER) sets the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy.

So far so good. There's a defined market and there are rules.

Then the privatisation of electricity supply and infrastructure began in earnest.

It should come as no surprise that this push towards full privatisation, with its downhill spiral in service delivery and uphill climb in cost to retail customers, began and was progressed during the term of Liberal Prime Minister John Howard.

By 2017 the NSW Berejiklian Coalition Government has almost completed its three-stage privatisation of state power infrastructure by selling off poles and wires and, it goes without saying that the retail cost of electricity is expected to rise again next year.

This is where we stand today……………………

[Graphs in Financial Review, 4 August 2017]
The Financial Review, 4 Augut 2017:

The annual cost to households of accepting a standing offer from one of the big three retailers instead of the best offer in the market has been estimated at $830 in Victoria, $900 in Queensland and $1400-$1500 in NSW and SA by the St Vincent de Paul Society.

Mr Mountain said power bills are constructed in such a complex way that ordinary customers without sophisticated spreadsheet and analytical skills have little hope of analysing competing offers to work out which offers them the best deal.

Private comparison websites do not include all market offers and charge retailers for switching customers, while the websites offered by the Australian Energy Regulator and the Victorian government do not provide the tools customers need to discriminate among offers.

Prime Minister Malcolm Turnbull has ordered the Australian Competition and Consumer Commission (ACCC) to conduct an inquiry into electricity supply, costs and pricing, including retail pricing.

The Treasurer should have a preliminary report from the ACCC in his hands by the end of September this year, however this body does not submit a final report until 30 June 2018 with no guarantee that any recommendations will be adopted by government and industry.

Quite frankly, it appears the privatisation train left the platform some time ago and there is no way to halt or divert it in order to genuinely benefit household consumers.

1 comment:

Ron said...

The South Australian liberal Government had to sell of the electricity to pay for the State Bank disaster when the bank went Bankrupt John Olsen sold the power to pay for the bank.