The Australian Competition and Consumers Commission (ACCC) has published a preliminary report into the electricity market highlighting the reasons behind the country’s skyrocketing power prices.
The Retail Electricity Pricing Inquiry preliminary report reveals electricity prices in Australia have increased by 63 per cent since 2007.
ACCC chairman Rod Sims said the main cause of higher customer bills was the significant increase in network costs for all states other than South Australia, where generation costs represented the highest increase.
“It’s no great secret that Australia has an electricity affordability problem,” Mr Sims said.
“What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure.
“The main reason customers’ electricity bills have gone up is due to higher network costs, a fact which is not widely recognised. To a lesser extent, increasing green costs and retailer costs also contributed.”
“We estimate that higher wholesale costs during 2016-17 contributed to a $167 increase in bills.
“The wholesale (generation) market is highly concentrated and this is likely to be contributing to higher wholesale electricity prices.”
The ACCC estimates in 2016-17, Queenslanders will be paying the most for their electricity, followed by South Australians and people living in NSW.
“Victorians will have the lowest electricity bills due to a range of factors including usage patterns in various states, including the prevalence of gas usage in Victoria in particular,” Mr Sims said.
“The closure of large baseload coal generation plants has seen gas-powered generation becoming the marginal source of generation more frequently, particularly in South Australia. Higher gas prices have contributed to increasing electricity prices.”
Mr Sims said there is much “ill-informed commentary” about the drivers of Australia’s electricity affordability problem.
“The ACCC believes you cannot address the problem unless you have a clear idea about what caused it,” he said.
“Armed with the clear findings on the causes of the problem, the ACCC will now focus on making recommendations that will improve electricity affordability across the National Electricity Market.”
Increased generation capacity, preventing further consolidation of existing generation assets, and improving the availability and affordability of gas for gas fired generation, could all help to take the pressure off retail electricity bills, according to the ACCC.
The ACCC will provide recommendations for reform in its final report, which is due to be handed down in June 2018.