Enough talk on electricity, governments must walk the walk and guarantee lower prices

In light of the disappointing Federal Government decision on the National Energy Guarantee, consumer and end-user groups (the ‘Group’) representing regional and urban communities have joined together to hold state and federal governments accountable on achieving price reductions for reliable electricity across the nation.

The cost of electricity used to be a source of competitive advantage for Australian industries, now our electricity costs are amongst the highest in the OECD. This is harming our international competitiveness and economy, providing poor outcomes for consumers, and disproportionately and negatively impacting vulnerable consumers and communities.  These conditions are clearly unacceptable.

In June 2018, the Australian Competition and Consumer Commission (ACCC) released the Restoring electricity affordability & Australia’s competitive advantage report, providing 56 recommendations across the electricity supply chain that, if implemented, will reduce electricity prices by at least 20-25% Australia wide by 2020-21. It is now up to state and federal governments to accept and implement these recommendations.

The Group is seeking that all levels of government commit to:

  • implementing the ACCC recommendations that will achieve a minimum 20% average electricity price reduction within the next four years;
  • establishing annual targets on achieving this price reduction target so the public can hold government to account; and
  • ongoing consultation with industry and consumer groups on the design and implementation of the ACCC recommendations.

Over the past decade, there has been a myriad of government reviews on the energy sector that has yielded very little tangible outcomes, with electricity prices doubling for most consumers. All levels of government will be held accountable by the Group if ACCC recommendations are not implemented, and there is a failure to achieve the very conservative target of a 20% electricity price reduction within four years.  There is no more room for political manoeuvring or passing the buck.

Participating organisations include: Australian Council of Social Service (ACOSS), Bundaberg Regional Irrigators Group, Canegrowers, Consumer Action Law Centre, National Irrigators Council, National Farmers’ Federation, NSW Farmers’ Association, Public Interest Advocacy Centre (PIAC), Queensland Farmers’ Federation, St Vincent de Paul Society (Victoria)

MEDIA CONTACT: Jonathan Brown, media@consumeraction.org.au, 0413 299 567

Attributable quotes

NSW Farmers’ Association: James Jackson, President

“Farmers are forced to deal with risks no other small businesses are exposed to, including the crippling effect of drought and extreme weather; what we cannot deal with is the never-ending spikes in energy prices as a result of poor government policy and inaction. The disappointing Federal Government decision on the NEG is a case in point.”

“There is something terribly wrong with the National Electricity Market where a small business owner, such as a dairy farmer, is now paying in excess of one-hundred-thousand dollars for electricity every year.”

“The ACCC has now provided a viable blue-print for affordable electricity. All levels of government must now expeditiously implement the ACCC recommendations or be held to account for yet another failure in ensuring affordable, reliable and sustainable electricity for all Australians.”

Australian Council of Social Service: Dr Cassandra Goldie, CEO

“People on low income or experiencing disadvantage are going without basic essentials like heating and cooling their home, food, and medicine so they can afford their energy bills.”

“In addition to rapidly reducing our emissions in the electricity sector, we must urgently address affordability across the entire energy supply chain and provide additional support for those most in need.”

“Two of the biggest actions governments can take to help those struggling the most, is to  raise the woefully inadequate level of social security for people unable to get enough paid work or studying. Newstart and other allowances have flat-lined for almost 25 years, as electricity prices skyrocketed; and mandate energy efficiency standards for rental properties.”

St Vincent De Paul (Victoria): Gavin Dufty , Manager Policy and Research

“Energy consumers are sick of broken promises and false dawns. It’s time for politicians to put in place a framework that puts consumers first, delivers on lowering prices, while allowing the energy industry to respond to the changing energy landscape”.

Queensland Farmers’ Federation: Travis Tobin, CEO

“The Queensland networks’ prices are over twice the efficient level, and they are achieving 3-4 times the annual profit margins of comparable energy companies. Excessive Regulated Asset Bases continue to drive network prices and profits, making them extraordinarily profitable – 23, 15.5 and 10.5 times greater than Lend Lease, Telstra and BHP respectively.”

“For every dollar that Queensland energy consumers paid for network charges over the past three years, the Queensland Government collected 47 cents in profits. Despite those extraordinary returns, successive Queensland Governments have consistently extracted more profits from the networks than they create.”

“And despite Queensland’s transmission and distribution networks being 100% government-owned with no private competition, the Queensland Government charges them competitive neutrality fees to ensure they do not have a competitive advantage which are then passed onto the consumer.”

Bundaberg Regional Irrigators Group: Dale Hollis, Energy Spokesperson

“The current cost of electricity results in the majority of our members not being able to sustain their enterprises using grid supplied electricity. Most are actively looking for alternatives and at this point in time a solar and/or diesel energy mix appears to be the most viable alternative.

We have been able to define a sustainable and affordable tariff as one that has a ceiling of 8 cents per kilowatt-hour for the electrons and 8 cents per kilowatt-hour for the network. (GST exclusive)

Should the ACCC write down regulatory asset bases and other recommendations be implemented we estimate that this will be achieved.”

National Farmers Federation: Tony Mahar, CEO

“The NFF is disappointed the national discussion on a NEG target has been shelved. This should not detract from measures that have been recommended by the ACCC that will support a more transparent market, focus on ensuring dispatchability, introduce a default market offer, and provide extra resourcing for the ACCC to oversee these measures. Importantly measures also recommended by the ACCC to provide greater transparency, and modify as necessary, rules for regional hubs should also be key reform considerations.”

National Irrigators Council: Steve Whan, CEO

“Irrigators grow more than 84% of Australia’s vegetables, fruit and nuts, more than 90% of our grapes, cotton and rice.  But pumping water requires energy and Australia’ energy prices are making our crops more expensive to produce. We are losing our international competitiveness and our farmers are losing the ability to provide Australian consumers with affordable fresh food and natural fibre.

Research conducted for the Ag Industry Energy Task force show that irrigators are paying up to 40% more than the economically efficient price for the electricity they receive.  In our case study that meant an irrigator paying $40,000 for their pumping cost was being charged $6,000 more than was really justified.  The ACCC recommendations attack the problem that sees market rules putting energy company profits ahead of the national interest, it is critical they be implemented.”

“Australians are paying too much for their electricity, particularly vulnerable consumers who are disengaged from the complex retail market. Households and businesses are paying for inefficiency and market concentration in the retail and wholesale markets, along with over investment in network infrastructure they never asked for.”

Public Interest Advocacy Centre: Craig Memery, Energy and Water Policy Team Leader

“Governments must acknowledge that energy is an essential service, not a luxury item, and ensure that vulnerable consumers no longer bear the brunt of high bills. The ACCC’s report offers a way forward: to address the current high prices, unlock the benefits to consumers of new technologies, and help ensure all Australians receive fair and reasonable access to electricity now and into the future.”

CANEGROWERS: Dan Galligan, CEO

“The ACCC has recommended that Queensland, NSW and Tasmania take immediate steps to remedy the past over-investment in networks through a voluntary write down in the RAB.   With surplus capacity in place and network plans for further increases in the RAB, electricity tariffs represent a substantial charge for services that are not being supplied and will not be required in the next five-year regulatory period.

It’s clear there is no need to augment the networks in the foreseeable future to meet the needs of agriculture.

CANEGROWERS is calling on the development of efficient network tariffs that enable economic development across the state, rather than tariffs that tax activity and reduce Australia’s international competitiveness.”

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