11 July 2018

ACCC plan to slash South Australian household power bills by an average of $371 per year by 2021

Source: https://www.adelaidenow.com.au

SOUTH Australian power bills would be slashed by an average of $371 per year by 2021 under reforms recommended by the Australian Competition and Consumer Commission.  In the interim, an ACCC report found that SA power prices continue to be among the highest in the world.
The report raised concerns about the market power of large vertically-integrated “gentailer” power companies which have both generation and retail operations.

AGL supplies 48 per cent of SA retail electricity customers and controls 42 per cent of generation capacity.  The ACCC wants to give small SA electricity retailers access to more cheap power for their customers by forcing the big “gentailers” to buy and sell hedge contracts for electricity every day.  “The ACCC is therefore recommending market making obligations be introduced in South Australia in order to boost market activity and provide access to trading partners for smaller retailer,’’ the report said.

Mergers between large power companies would also be banned to prevent a further reduction in competition and regulators would get more power to crack down on predatory behaviour in the sector.

The ACCC found discounting by retailers could be misleading and unfair.
It said customers should be able to compare discounts to a benchmark rate set by the Australian Energy Regulator.  Changes were also recommended to make it easier and faster for customers to change to cheaper deals.
It also called for a nationally-consistent approach to electricity concessions for low-income earners.

The ACCC said the 2016 closure of the coal-fired Northern Power Station had driven up prices and made the state more dependent on electricity generated by gas.  “South Australian prices increased dramatically in the months following the closure of the Northern power station, the report said.
“Other factors such as the Victoria — South Australia Heywood interconnector upgrade occurred at a similar time which likely contributed to price outcomes.

SA’s power prices were almost as high as Germany and Denmark, which have environmental taxes on energy.  The ACCC said SA’s small businesses were struggling with high electricity costs.  “The South Australian Hotels Association reported increasing financial stress across its members, with examples of bills increasing by $500 —$600 per week, and highlighted electricity prices were a key factor in some hotel closures’’ the report said.

It said the cost of solar feed-in tariff schemes, which subsidise household solar panels, should be met through state government budgets instead of higher power prices for other energy users.

Federal Treasurer Scott Morrison and Energy Minister Josh Frydenberg said they would discuss the recommendations with the states.  “We will consider the recommendations in detail and consult with stakeholders and jurisdictions as part of developing the Commonwealth’s response before the end of 2018,’’ Mr Morrison and Mr Frydenberg said in a statement.
Federal Labor energy spokesman Mark Butler said power prices had skyrocketed under the Turnbull Government.  “For too long, recommendations for sensible change have been lost in the fog of the civil war being waged in the Coalition Party Room over energy policy,’’ Mr Butler said.