$100 a year could be shaved off Australian households’ electricity bill if governments fix issues relating to the regulation of distribution networks say the Grattan Institute.
Grattan Institute Energy Program Director Tony Wood says reducing the enormous profits monopoly distribution businesses generate could save consumers a total of $2.2 billion a year.
“People are worried about rising electricity bills. There are things governments can do to make a difference, and this report explains what they are”.
The report – “Putting the customer back in front: How to make electricity prices cheaper” details how electricity distributors have made changes over the years to the detriment of consumers.
The report states governments should direct and empower the Australian Energy Regulator (AER) to set the parameters that ultimately determine customer costs and company profits in what is a low risk sector.
The Grattan Institute also states the responsibility for setting reliability standards should be shifted from state governments to the Australian Energy Market
Commission (AEMC) and the AER.
Another big issue recently in the headlines relates to the “gold-plating” of infrastructure. Grattan says the AER should be empowered to review companies’ capital expenditure forecasts annually against credible market demand forecasts, and ensure any apparent over-expenditure is subjected to a rigorous cost-benefit
analysis.
Importantly, regulators should be directed to act in the long-term interests of consumers, while not hindering distribution companies from making fair and reasonable profits.
The Grattan Institute’s report can be downloaded here (PDF).
There will be all manner of argy-bargy over the next couple of years in relation to cutting electricity costs – AGL has already come out swinging against price cuts recommended by the Essential Services Commission of South Australia (ESCOSA) and is apparently now taking legal action against the body.
Against this backdrop of bickering, consumers continue to suffer chronic pain at the power-point. But there is literally light at the end of the tunnel for some households. Instead of waiting for government action – the results of which are far from set in stone nor guaranteed to provide real relief – households can slash or even wipe out their power bills by installing solar panel systems.
One thing that has certainly changed for the better in recent times is the portrayal of solar power systems being the primary villain of electricity price rises; with the finger now being pointed squarely back at some of those who originally started and/or perpetuated the myth.
