SA Government Intervenes On Electricity Prices

SA Power Networks - Electricity Prices

The South Australian Government announced yesterday it was stepping in to thwart attempts by SA Power Networks to bump up charges for electricity distribution.

Energy Minister Tom Koutsantonis has directed Executive Director of Energy Vince Duffy to deliver an oral submission to the Australian Competition Tribunal in response to an appeal by SA Power Networks ( SAPN) to extract more cash from South Australian customers.

According to the State Government, SAPN was seeking a total revenue allowance of $4.53 billion during 2015-2020; but has only been granted $3.84 billion, which it is appealing.

“There is a reason why the Australian Energy Regulator determined that SAPN could not introduce these extraordinary increases in charges, and that is because there has been no compelling evidence put forward to justify them,” states Minister Koutsantonis.

“That is why I decided to intervene in the appeal process and make a submission to the Australian Competition Tribunal in Melbourne.”

In 2014, it was reported foreign-owned SAPN, which operates the electricity distribution network of poles, wires and substations in South Australia, was raking in after-tax profits of $420 a year on average from each customer.

Any reining in of increases would no doubt be welcomed by businesses and households in South Australia; but preserving the status quo will still mean electricity customers are enduring high power prices.

According to a recent report, South Australia has the OECD’s second-highest pre-tax electricity prices.

Renewable sources such as wind energy and solar power are often blamed for South Australia’s high electricity prices, and particularly spot prices. However, a new report from the Climate Council indicates electricity price spikes have reduced as renewable energy grows. For example, in 2015, there was a single spike compared to more than 50 in 2008.

A recent series of price spikes has been due to an interconnector operating on restricted capacity, the state’s reliance on more expensive fossil fuel options (gas) and lower electricity market competition.

South Australian households and businesses have certainly taken action on high power prices – the state has the second highest rate of solar panel uptake in Australia and interest in battery energy storage is building.

According to solar provider Energy Matters, good quality solar power systems featuring Tesla Powerwall battery storage installed in Adelaide can provide a financial benefit of up to $3,000 annually (depending on installation and electricity consumption scenario).

SA Power Networks’ relationship with solar households has also been a somewhat contentious one at times in recent years. In May 2015, it sought to not provide network charge reductions to solar owners equal to non-solar households. This attempt to implement a “solar tax” of sorts was quashed by a Federal Court ruling in December last year.