The Australian Energy Regulator has approved a 9.2 percent price increase for Queensland’s electricity providers, Energex and Ergon Energy beginning July 1st.
This is the first time the AER has made determinations for the Queensland distributors. Previous determinations were made by the Queensland Competition Authority. Energex provides electricity to nearly 1.5 million customers in the south east Queensland while Ergon Energy delivers electricity to over 630 000 customers across the remainder of the state.
AER chairman Steve Edwell said that in reviewing Energex’s regulatory proposals for the next five years the AER had found Energex’s approach to network planning and management to be sound.
“The AER has substantially reduced the expenditure proposed by Ergon Energy to ensure that only prudent and efficient costs would be recovered from customers,” Mr Edwell said.
Based on this determination, network charges for Energex’s customers would increase in nominal terms on average by 17 per cent in the first year of the regulatory period, followed by 6.8 per cent in the subsequent years of the period. For Ergon Energy’s customers, network charges would increase by 29 per cent in the first year followed by 4.6 per cent in the subsequent years of the period.
“There has been strong growth in the number of connections over the past few years and this is forecast to continue. In addition, the load at each connection is growing as customers continue to install air conditioners and other appliances. In addition, customers expect better service through improving standards of reliability. Cost of materials and labour and financing costs are increasing in the strong economic conditions Australia is experiencing. This decision allows increased charges so the companies can meet these higher demands, and the AER will be carefully monitoring their performance to be sure they deliver,” Mr Edwell said.
In terms of a typical residential customer in Queensland with annual electricity charges of $1,400 in 2009-10, the increase in network charges (which make up about 40 per cent of the annual bill) will result in an increase in the annual electricity charge by $129 (around 9.2 per cent) in 2010-11 and by around $35 (around 2.3 per cent) each year thereafter in nominal terms.
Queensland Council of Social Service president Karyn Walsh believes the increase will hurt those on low incomes and needs to be reviewed.
“In a wealthy society, everyone should be able to know that they can afford it,” Karyn Walsh said.
“We’d like to see them increase the rebate for concession holders and also to extend concessions beyond people who have just got health concession cards but to everyone who’s unemployed, and also to look at some of the equity issues.”
Karyn Walsh’s counterpart Queensland Council of Social Service director Jill Lang mirrored her statements.
“We already have the second highest rate of electricity disconnections for non-payment in Australia,” Ms Lang said.
“What we really need is a complete review of the concession framework.”