24 Oct 2012
Electricity users are being overcharged by as much as $3 billion due to the poor way the industry has been run, with power companies able to "cherry pick" the way the government regulates their spending plans. And much of this burden has been borne by NSW consumers, with at least $2 billion of this due to allowing higher than necessary allowances for their borrowings.In a strongly worded speech to an energy gathering, to be given today, the chairman of the Australian Competition and Consumer Commission, Mr Rod Sims, blames much of the rise in electricity prices-which have doubled in some parts of NSW over past few years-on unnecessary spending on "poles and wires" which has made up as much as half of the spending over the past five years.
But the poor way the Federal government has controlled the spending has resulted in the industry regulator, the Australian Energy Regulator, having "little ability,.. to deal with excessive forecasts". This has allowed the power companies able to "cherry pick" decisions, adding as much as $3 billion to electricity bills, Mr Sims said.
The burden was heaviest on NSW consumers, since electricity companies were allowed to inflate their costs by "nearly $2 billion" he said, by claiming that they faced higher interest rates than was the case. "Further 'lead' in the saddle bag has been provided by the decisions in Queensland and NSW to make networks meet higher reliability standards", Mr Sims said, which was spending the government regulator could not block.
"The increased cost of electricity has also harmed the competitiveness of Australian businesses and indeed the entire Australian economy". "Electricity prices have risen by more than they should have. While there have been legitimate drivers for some increases, prices have also increased for a number of unnecessary and inappropriate reasons. Mr Sims called for the industry regulator, the AER, to be retained as an arm of the ACCC, rather than split off, as some groups have sought.
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