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Queensland electricity prices to rise

Posted by Joseph Kim , June 6, 2013 //

Tony Moore
brisbanetimes.com.au senior reporter

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Queenslanders are set to pay more for power. Photo: Glenn Hunt

Queensland electricity prices will increase $268 a year, or 22.6 per cent, for households on the typical tariff, the Queensland Competition Authority has confirmed.
QCA chairman Malcolm Roberts accepted the price increase would hit families and small businesses.
‘‘As I have said, this will not be a popular decision,’’ he said.
‘‘But we believe it is the right decision.’’
He said 70 per cent of customers were on market contract and would not see the full price increase announced today.
While the average residential electricity bill will rise by 22.6 per cent or $268 in 2013-14, the average small business electricity bill will rise by about 17 per cent or a $281.
The average electricity bill for a family of four will increase by $343 a year, from $1662 per year to $2005 per year – a 21 per cent increase.

Labor condemns increase
Ahead of the announcement, Labor predicted electricity prices would increase by $266 in 2013-14 – up from $253 a year estimated by the QCA.
Shadow treasurer Curtis Pitt has analysed figures gazetted this morning and has concluded the price rise would be 22.5 per cent rather than the 21.4 per cent previously flagged by the QCA.
‘‘[Premier] Campbell Newman promised Queenslanders in writing that he’d [lower] their power bills,’’ Mr Pitt said.
‘‘It was a reckless promise and clearly a shameless pre-election stunt that Mr Newman never had any intention of honouring.’’
Labor has analysed the figures for Tariff 11 – the common electricity tariff.

Promised $100 rebate shelved
Neither Treasurer Tim Nicholls nor Energy Minister Mark McArdle held media conferences after the electricity price rise announcement.
In a statement Mr Nicholls admitted the increase would be a “further blow” to consumers, but said the government could not afford its planned electricity rebate.
He said the cost of running the electricity network – the poles and the electricity lines – were partly to blame for the price rise.
Energy Minister Mark McArdle instead the blamed the carbon tax, which adds $19.83 a year – or 38 cents a week – to the $268 annual increase ($5.15 a week) to the residential electricity bill.
He repeated his concerns about the cost of providing the solar feed-in tariff, which in 2013-14 will add $32 a year (61 cents a week) to the $268 a year increase.
That would amount to $67 in the complete average customer’s annual electricity bill in 2013-14 and up to $276 to the complete power bill in 2015-16, he said.
Pensioners and concession card owners will get some relief from the price rise because Tuesday’s budget will include $136 million to offset any electricity price increase for them.

“Freeze” to blame
Mr Pitt said the state government’s decision last year to ‘‘freeze’’ the cost of the most common electricity tariff was a major factor in today’s decision on electricity charges.
The detail was imputed in the QCA’s draft ruling on Queensland’s electricity prices in February.
‘‘What we know from the reasons from their draft determination in February is that the reasons for the price increases included network charges and the price freeze out on tariff 11 last year,’’ he said.
‘‘They are directly responsible for the magnitude of this price rise in terms of being just a 10 per cent rise.
‘‘This is a 22.5 per cent rise that Queensland families are going to have to cop.’’
Mr Pitt also questioned why Mr Nicholls described in February the price rise as “not acceptable’’, but had decided this week the state government could not afford the $100 electricity price rebate it had promised.
Mr Roberts said the QCA identified that $73 of the $268 increase was due to the lifting of the tariff 11 freeze, which the government set for 12 months.
“There is an increase due to the removal of the tariff freeze,” he said, acknowledging prices had to catch up with electricity costs.
“The tariff freeze meant the customers did not have to pay these costs this year, but the tariff was set for 12 months,” he said.
“So there will be an increase in 2013-14.”
QCA chairman Malcolm Roberts agreed the QCA identified that $73 of the $268 increase to electricity bill was due to the lifting of the tariff 11 freeze, which the government set for 12 months.
“There is an increase due to the removal of the tariff freeze,” he said, acknowledging prices had to catch up with electricity costs.
“The tariff freeze meant the customers did not have to pay these costs this year, but the tariff was set for 12 months,” he said.
“So there will be an increase in 2013-14.”

Price rise foreshadowed
The QCA sets electricity price rises independently of the Queensland government.
In February the body warned a typical residential customer’s annual electricity bill would rise from $1184 a year to $1437 a year, an increase of $253.
The actual increase in a household’s bill will depend on its electricity use.
In its February 2013 report, the QCA said the Queensland government’s decision to “freeze” the charge for the most common residential electricity tariff (Tariff 11) for 2011-12 would add $73 a year for each residential consumer in 2013-14.
“This increase is made up of $73 to close the gap between the frozen Tariff 11 charges and the Queensland Competition Authority cost-reflective Tariff 11 charges,” the executive summary says.
“And a further $180 which reflects the underlying increase in the cost-reflective charges for Tariff 11 between 2012-13 and 2013-14.”

The reasons
The report pointed out that the cost of producing the electricity was the main reason for the price rises.
However it was critical that neither Energex nor Ergon encouraged consumers use their electricity at cheaper times, the report said.
“While Energex and Ergon Energy have often cited peak demand as a key driver of their costs, many stakeholders have rightly questioned why both distributors provide such weak incentives to customers to shift their consumption to off-peak periods,” the QCA report said.
“For example, Ergon Energy does not have any time-of-use tariffs.”
The report said very few customers have switched across to the cheaper Tariff 12, introduced last year by the state government when it froze the Tariff 11 charge at 2011-12 prices.
Earlier this week the state government highlighted part of the report to point the finger at the cost to the network of providing a rebate to people using solar energy systems.

Read more: http://www.brisbanetimes.com.au/queensland/queensland-electricity-prices-to-rise-20130531-2ng00.html#ixzz2VOYDqvvW