Energy Minister Josh Frydenberg orders crackdown on ‘totally unacceptable’ electricity price gouging

Price gouging under fire in AER investigation of electricity networks.

A Federal Government crackdown on electricity price gouging by distribution networks could save householders hundreds of dollars on power bills.

A review will be carried out by the Australian Energy Regulator (AER) to ensure energy companies are not charging customers for their corporate tax liabilities.

According to the Minister for the Environment and Energy, Josh Frydenberg, it is “totally unacceptable” for consumers to be charged for corporate tax liabilities they have not incurred.

Anomalies in energy network tax data

The crackdown follows Australian Taxation Office analysis of company tax data between 2013 and 2016. Results revealed anomalies in the figures.

Electricity price gouging being investigated by AER.

No consumer should be price gouged on power bills says Energy Minister in new network crackdown. Image: Pixabay

Regulated energy networks receive a tax allowance to cover their corporate tax liabilities. The ATO found a discrepancy between previously set tax allowances and the amount actually paid by the businesses.

Electricity price gouging attacked after failed court appeal

This is not the first time the AER has fronted up to network companies in an attempt to end price gouging.

Because household electricity bills rose 70 per cent in the five years to 2013, the AER announced in 2015 it would cut revenue to state electricity networks. Revenue would therefore be reduced by around 30 per cent less than requested for the next four years.

NSW power utilities then took their case to the Australian Competition Tribunal claiming the cuts would make networks unreliable.

The tribunal subsequently upheld the appeal. An appeal by the AER against the tribunal decision was eventually overturned by the Federal Court.

This decision opened the door for energy networks to charge households hundreds of dollars each year beginning in July 2018.

Scrapping of appeal process increases chance of success

Federal efforts to fix the regulatory framework include the abolition of the Limited Merits Review regime. This effectively stops networks increasing electricity prices through legal appeal.

Because the appeals process for network businesses is curtailed, AER decisions may be more successful this time round.

Meanwhile, householders and businesses are  increasingly choosing  solar panel installations to reduce reliance on the grid and slash electricity bills.

The addition of energy storage batteries like the Tesla Powerwall also means power generated while the sun shines can be stored and used during peak evening times.