Power bill price hikes in pipeline

Hobart Mercury
Tuesday 31/3/2009 Page: 3

TASMANIANS face huge power price hikes and the State Government must introduce competition in the energy market if it wants to slow the rises, experts say. Energy Users of Australia executive director Roman Domanski said his members, including Rio Tinto, Alcan, TEMCO and Norske Skog, faced multiple pressures which would increase energy costs.

"Transmission charges, a price on carbon and a higher renewable energy target will all increase costs." Mr Domanski said. "That is on top of the already high prices being paid by Tasmanians on the National Electricity Market Management Company of not much less than $100 a MW hour." EUA plans to challenge the Transend rises with the Australian Energy Regulator.

Mr Domanski said Transend had proposed a 60% rise in charges - a 19% rise in July and a compound rise of 5.8% over each of the next five years. The Transend rises are expected to add $30 a year to residential power bills and a further $12 a year until 2014. Mr Domanski said the capital expenditure proposed by Transend was not justified.

He said the Government needed to announce when it would have full retail competition, including companies from interstate. "It is important the Government get on with this and announce when they will have full retail competition or customers here will be always beholden to Aurora," he said.

Mr Domanski said Tasmanian "mums and dads" were on regulated prices and needed competition for lower prices. "Retail contestability is the best and surest way to get more retailers into the market down here," he said. He said that in an environment of high wholesale prices it was difficult to move people off regulated tariffs.

"But until you make an announcement you will never create the environment for competition," he said. "It is inevitable it will happen. The Government might as well face it and make some sort of announcement about it." He said competition was limited with one dominant generator (Hydro Tasmania) and one dominant retailer (Aurora).

"It is a particularly bad situation for Tasmanian users because at the same time they are being tossed into the contestable market there is a lack of competition," he said. Mr Domanski said Rio Tinto Alcan would face formidable challenges when it came out of a longterm contract with Hydro in 2014. "That contract represents a premarket situation when Hydro Tasmania was a monopoly business," he said. "I aim sure people in Tasmania don't want to see operations like that put at risk."