News

Power bills could fall 26 per cent

By Rick Bayne

DAIRY FARMERS and processors could see electricity costs fall by 26 per cent according to the corporate watchdog.

The Australian Competition and Consumer Commission has told the Federal Government the sector needs reform to bring down prices and restore confidence.

The ACCC made 56 recommendations on how to fix the national electricity market, outlined in its final Retail Electricity Pricing Inquiry report, released last month.

The Inquiry, which commenced in March 2017, began by identifying the root causes of high electricity prices across the entire electricity supply chain, and has now made 56 recommendations detailing ways to fix the National Electricity Market.

The ACCC inquiry was commissioned in March 2017 by Treasurer Scott Morrison.

ACCC Chair, Rod Sims, said there were many reasons behind rising prices, including:

Wholesale and retail markets are too concentrated.

Regulation and poorly designed policy adding significant costs to electricity bills.

Retailers’ marketing of discounts are inconsistent and confusing to consumers and have left many consumers on excessively high ‘standing’ offers.

Federal Energy Minister Josh Frydenberg said the Government would carefully consider the report’s 56 recommendations in consultation with state and territory governments.

The Australian Energy Council blamed a ‘decade of energy policy uncertainty’ from Government that has has an adverse effect on ‘much needed’ investment in the energy sector.

“We encourage the Government to consult on the detail of the ACCC recommendations to avoid any unintended consequences, especially on those recommendations that involve market interventions.

“Such proposals must not unintentionally undermine the commercial functioning of the wholesale market, which can put taxpayer funds at risk and deter future private investment.”

The Queensland Farmers Federation said the ACCC report “largely tells farmers what they already know”.

QFF President Stuart Armitage said farmers want to know what is going to change and when they will see affordable energy prices.

“There has been no real or demonstrable decrease in Queensland’s farmers’ electricity bills,” Mr Armitage said.

He said some farmers have seen electricity cost rises of more htan 200 per cent in ten years, against a CPI rise of 24 per cent in the same period.

“And based on current State Government policy and tariff offerings, many regional customers face further bill increases in excess of 50 per cent when they are forced on to standard business demand-based tariffs in less than two years.”

Mr Armitage welcomed some of the recommendations but said the report needs teeth and support from state Governments.

NSW dairy farmer group, Dairy Connect, called for a Royal Commission into electricity prices and contractual relationships.

CEO Shaughn Morgan said the impact of energy prices was analysed closely in a dairy farm energy cost case-study that formed part of an Australia Consumer and Competition Commission report.

“The ACCC report clearly enumerated how dairy farmers were paying twice for energy cost hikes.

“They pay once at the dairy shed and again at the farm gate in the form of price cuts for their fresh nutritious milk.”

Dairy Australia has estimated that the total cost of energy for dairy processors was about $160 million a year.

The dairy industry ‘market failure’ argument was supported by Cameron Quin, the national business director of commercial solar operator Solar Bay.

He said Solar Bay had been working as an ‘honest broker’ for dairy farmers in unravelling complex commercial transactions between producers and energy retailers.

“Quite often debts claimed for energy consumption are just plain wrong and dramatically overblown,” he said.

“We’ve found some number of dairy farmers who had not received an energy bill for around six months and, when a bill did arrive, it could be up to three times the relevant network tariff.”

“One producer paid an incorrect embedded network tariff bill for $7000, an amount that still hasn’t been repaid.

“Retailers make it really difficult with some of the world’s most complex invoice and anti-competitive clauses.”

Key recommendations

• The Australian Energy Regulator should be given more powers to target market manipulation.

• Discounts are misleading and need to be made fairer.

• Customers should be able to compare discounts from a default or benchmark rate set by the regulator.

• Customer transfer process should be speeded up so customers can move to new offers quickly.

• Special conditions, like pay on time discounts, should not operate like harsh late penalties.

• Third-party comparator sites should declare commissions.

• Government support to underpin long-term contracts for large commercial and industrial users that brings on new dispatchable power for new generators.

• A cap on any further merger or acquisition of a company with more than 20 per cent market share of generation (excluding companies building new generation).