Report of $3 billion ‘cuts’ by Energy Queensland wrong: Pitt

Treasurer Curtis Pitt said the claimed “cut” to capital expenditure for the period 2015-16 to 2019-20 by Energy Queensland – formed from the merger of Energex and Ergon – did not reflect cuts to its budget or forced savings.

“The figure refers to a comparison with the total capital expenditure over five years by Energex and Ergon authorised by the Australian Energy Regulator (AER) compared with the previous five-year period from 2010-11 to 2014-15,” Mr Pitt said.

“By backing the false claim Scott Emerson has shown he simply hasn’t a clue about the issues and concepts he needs to understand as shadow treasurer.”

Mr Pitt said it needed to be understood that Queensland’s energy companies were subject to regulation by the AER which monitored, investigated and enforced compliance with the regulatory framework governing the national electricity market.

“This regulation includes monitoring prices, network constraints and outages, demand forecasts and forecasts of production and capacity,” he said.

“The AER sets the revenue that can be recovered by energy network businesses – including Energy Queensland – under national energy legislation and rules.

“In simple terms, Energex and Ergon need to spend $3 billion less on their networks in the next five year than they spent in the previous five years – that means lower capital expenditure is likely to contribute to more price stabilisation for consumers through power bills.

Both Energex and Ergon submitted their updated capital expenditure proposals to the AER covering the five years from 2015-16 to 2019-20. Energex’s proposal was for almost $2.89 billion in capital expenditure over the five-year period and in October last year the AER authorised a lower figure of around $2.76 billion.

Ergon sought approval for capital expenditure of $3.28 billion over five years and the AER authorised an amount of $2.86 billion.

The approved totals are together around $3 billion below their total actual capital spending for the previous five-year period from 2010-11 to 2014-15 which, in turn, was below higher levels previously authorised by the AER for the period.

“With less capital expenditure required to meet network requirements between 2015-16 and 2019-20, it is anticipated this will deliver more price stability for the public and business consumers when compared with the period under the LNP’s watch, which saw power prices skyrocket,” Mr Pitt said.

“To further help achieve price stability, the Palaszczuk Government directed Energex and Ergon not to appeal the AER’s revenue determinations last year.

“This is in marked contrast to the situation in NSW and the ACT, and would not have been possible had Energex and Ergon been sold to the highest bidder – as planned by the Newman-Nicholls LNP government.

“To link the reductions in expenditure required to meet the AER’s determinations to savings and efficiencies to be achieved through the merger is cynical and disingenuous.”