Business

91% increase in electricity prices in five years

THE prices Australians paid for electricity rose a massive 91% in the past five years, a report from the Australian Energy Regulator has revealed.

In its State of the Energy Market report, the AER wrote that the average power price increase across the nation in the last five years was 91%.

And while overinvestment in electricity transmission networks, or gold-plating, was an issue, the regulator wrote that lax energy market rules were mostly to blame.

The report revealed the energy market rules, put in place in 2006, had limited the ability of the AER to amend revenue proposals put forward by the energy networks, leading to the cost increases.

"While the rules reflected policy concerns at the time about the adequacy of network investment, they led to unnecessarily high revenue streams for network businesses," the report reads.

It also showed other cost pressures in the electricity market arose from stricter reliability controls at state government levels, which were a secondary factor in the price rises.

In combination, the national state regulations led to the 91% price rises for Australian households, as well as massive revenue increases for the network businesses.

While the market report shows the changes in the past year, and highlights the cost increases, there is already much reform under way to improve the system.

This includes wide-ranging proposals under the Federal Government's Energy White Paper, and the Australian Energy Market Commission's Power of Choice review, both completed in recent months.

While the two reform proposals are unlikely to result in any price falls for the average retail consumer in the next financial year, they could result in longer term reforms to drive costs down.

Topics:  electricity prices




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