ECA: Network cost reductions need to be passed on to consumers

ECA

Energy Consumers Australia (ECA) interim CEO Lynne Gallagher welcomed the Australian Energy Regulator’s decisions on electricity network costs in South Australia and Queensland, saying it means lower retail prices from July 1 are on the cards.

Ms Gallagher said with network and wholesale costs falling and default market offers also coming down, there was now an absolute expectation from Australians that prices would fall from July 1.

“With the country moving into recession, and people and businesses experiencing loss of income, cost of living pressures become more important than ever,” Ms Gallagher said.

“With network prices falling and wholesale prices at their lowest level since 2016, it is incumbent on energy retailers to announce lower prices from July 1. Anything other than lower prices will fail the ‘consumer expectation’ test, that industry is doing everything that is needed to improve affordability.

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“It is critical that the cost savings to energy retailers flow through to households and small businesses, so that their bills can be managed, given that in recent years energy prices have never been more expensive.”

In South Australia, annual electricity network costs will decrease by $40 (2.1 per cent) for households and by $166 (1.8 per cent) for small businesses. In Queensland, annual electricity network costs will decrease by $73 (4.6 per cent) for households, and by $82 (3.7 per cent) for small businesses.

The AER also today announced lower gas prices for New South Wales (NSW) consumers, where network costs represent about 41 per cent of the total bill in coastal areas and 33 per cent in regional areas.

Households in the coastal region of NSW will have lower annual network costs of $55 (8.3 per cent), while for other regional consumers annual network costs will be lower by $81 (6.8 per cent). Typical small business consumers should see lower network costs of $289 (6 per cent).

Related article:AER approves 2020-21 SA AGN network tarrifs

Ms Gallagher highlighted the role consumers had played in the decisions, with consumer organisations and the community being engaged in robust and open discussion with network businesses. 

“Where consumers and networks have achieved significant alignment, this is contributing to growing levels of co-operation and trust,” she said.

“We also welcome the AER’s decision on key financial settings including accelerated depreciation, treatment of different types of capital expenditure and network tariff settings.

“All eyes are now on energy retailers, who are expected to announce their price changes for 2020-21 in the coming weeks.”