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Review finds Victorian power price drivers

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August 22, 2017

Industry practices, a market that doesn’t benefit consumers and the current competition structure are driving up Victoria’s electricity and gas prices, an independent review has found.

Industry practices, a market that doesn’t benefit consumers and the current competition structure are driving up Victoria’s electricity and gas prices, an independent review has found.

Tabled in State Parliament last week, the report said Victoria’s prices were ‘‘unusually high’’ with no clear cause.

‘‘While wholesale electricity and gas costs have moved up and down since 2000, network prices have increased moderately and environmental costs have contributed marginally, there is no constant trend that can explain the significant increase in retail prices,’’ the Review of Electricity and Gas Retail Markets report said.

‘‘The retail results found that Victorian households are paying much higher prices than official estimates; on average around 21 per cent more for their electricity than the cheapest offer available in the market.’’

The independent bi-partisan report found that although competition mechanisms introduced in 2002 were intended to result in consumer benefits through lower costs, electricity and gas prices have increased almost 200 per cent since 2000, prior to competition.

The rising cost of electricity has hit farmers hard, with the Australian Dairy Industry Council claiming that dairy farmers spend between $35 and $75/day on electricity to power their dairies, compared to between $20 and $45/day seven years ago.

The group pointed the finger at rising tariffs, rising network and service charges, and environmental state levies that have seen daily electricity prices rise between 33 and 100 per cent since 2010.

According to the Australian Bureau of Agricultural and Resource Economics and Sciences electricity costs account for three per cent of total dairy farm operating costs, compared with less than one per cent in the livestock and cropping industry.

Australian Dairy Farmers natural resources and management group chair and Katunga dairy farmer Daryl Hoey said the dairy industry had a ‘‘huge’’ requirement for power.

‘‘At the moment we’re not really going to solve these issues until we can get to a bi-partisan approach where both sides can agree on a strategy and know that it’s not going to get thrown out at the change of every election,’’ Mr Hoey said.

‘‘At the end of the day (farmers) just want lower power prices.’’

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