Maintain and modify electricity tariffs in Queeensland
Queensland, Australia: An importanat campaign, Maintain and modify electricity tariffs, has been started by Roger Colclough. The following release is relevant to the campaign:
With soaring electricity bills creating increasing stress on tight household budgets, the management of Australia’s vast energy infrastructure must come under scrutiny with consumers urged to lobby their State Governments for greater equity.
Since the first power station was built in Melbourne in 1894, Australia’s reliance on the bulk production of electricity to meet basic needs has grown exponentially along with our reliance on technology and powered goods. The supply of electricity has therefore been elevated beyond that of a luxury to a need, impacting the quality of life and livelihoods enjoyed by ordinary Australians going about their daily lives. But now, what we regard as an ordinary necessity may soon become an ill-afforded luxury item and consumers should question the Government policies that have brought us here.
Consumers are urged to become more informed about how and why the basic need of an affordable, reliable power supply has been allowed to become such a financial burden in a country renowned for its own coal and other power-generation resources. State Governments have gradually sold-off Australia’s electricity-generating assets along with our associated coalfields at well below market prices but at what cost? With their decisions legitimized by catch phrases such as “increasing choice” or “improving business efficiencies”, the States have embarked on a strategy of rampant asset sales with no public consultation.
One example is the midnight sale of assets (in December 2010) by NSW Premier, Kristina Kenneally to TRU Energy, a wholly owned subsidiary of Hong Kong’s China Light and Power (CLP). CLP is 35 percent owned by on of Hong Kong’s richest businessmen, Sir Michael Kadoorie. With a sale price estimated at around $3.2bn or fifty percent of the asset value, the transaction went ahead despite the resignation in protest of most of the existing Boards of Directors. For their participation in the market, as well as record profits, CLP have received a consolidated tax benefit of HK$989 M from the Australian Tax Office. Last financial year CLP increased profits in its Australian operations by 126 per cent. TRU Energy Australia now controls the majority of electrical power assets in South Australia, Tasmania, Victoria and NSW.
An office has also recently been opened in Queensland. In Queensland the race to off-load important assets for the sake of quick bucks began much earlier in 1994 with the sale of the coal-fired generating plant in Gladstone that had been built by Joh Bjelke-Petersen. That year, under the Gladstone Power Station Act, the Goss government with Peter Beattie as Treasurer, sold the Gladstone plant to Conzinc RioTinto Australia (CRA) and a consortium of foreign investors for an undisclosed sum. An American company NRG was appointed to operate the power station. In justifying the sale, Treasurer Beattie famously said that “no Queenslander will be disadvantaged by the privatization” but the result?
Just five years later, in 2009, the Queensland Council for Social Services (QCOSS) reported that 30,000 Queenslanders had their electricity disconnected due to failure to pay bills. The QCOSS report also stated that one in 10 Queenslanders lived below the poverty line (disposable income of just $281).
Part of the Gladstone Act guaranteed what can only be described as ‘farm gate’ prices to NRG. Retailers such as Ergon and Energex were required to have bank guarantees in place to ensure that NRG was paid. The cost of these guarantees was passed on to the consumer. NRG has since sold the asset to Transfield. The newly constructed high voltage power line from the South incurs up to 47% transmission losses that will also be added to consumer tariffs. Tariffs in Queensland are regulated under the Electricity Act and the Electricity Regulation Act, giving the relevant minister the right to set up a pricing regime under the euphemistically-named Queensland Competition Authority (QCA). Tariffs, which are annually reviewed, are published in the Electricity Gazette with inputs from power generators, distributors and retailers. The consumer input is by QCOSS which is, incidentally, 80% funded by the Queensland Government.
So how does the QCA establish its pricing regime? We know that it employs consultant, ACIL Tasman who also consult to the owners, CRA with no questions regarding conflict of interest. And we know that one criteria is the cost of acquisition of customers by retailers. That’s right – consumers pay for the cost of energy retailers getting more customers including expensive door knocks and call centres. Of course marketing costs don’t matter because, in the end, the cost will be covered by consumers. But what are the current costs to Queenslanders? Domestic tariffs here presently fall into three categories with Tariff 11, the 24/7 peak rate presently costing consumer 19.41 (excl gst) cents per kilowatt hour. Tariff 31, the Super Economy night rate which is available for off- peak storage heaters presently costs 7.21 (excl gst) cents per kilowatt hour.
The third one is Tariff 33, economy rate delivered to consumers at 11.66 (excl gst) cents per kilowatt hour but it comes with limitations. This rate is made available to consumers for a guaranteed 18 hours per day but, thanks to an almost forgotten provision in the Electricity Gazette, it must be ‘hard wired ‘to the consumers switch board. This means that an appliance must be wired by an electrical contractor and that supply may be interrupted at the retailer’s convenience when demand on the grid peaks with obvious ramifications for certainty of supply. Consumers are dissatisfied but lobby groups attempting to change the ‘hard wiring’ provision in the Electricity Gazette to help us take better advantage of the more economical tariff have failed.
A submission by the retailer Integral Energy was submitted to the Queensland Competition Authority but was disregarded, with Integral claiming power bills would be reduced for the consumer and that off-peak energy would be used to smooth the demand cycle. It is of no further comfort that Queensland’s tariffs are subject to further review and indications are that a 40% increase is planned in the next two years. What’s more, in the future tariffs may be set by individual retailers and although rates may not vary greatly, economy rates may be dropped altogether with tariffs based on demand rather than time-of-use as it is in other States.
In NSW Peak, for example, tariffs have been set at 2500kw Hours, coinciding with average usage over a billing period. After that a ‘shoulder’ rate is incurred. It’s privatization that ought to be blamed. Where previously, electricity was generated, distributed and sold by one government authority, today generators, distributors and retailers must generate profits to satisfy shareholders. This is effectively a triple dip. At the same time, conflicts of interest and monopolistic relationships threaten competitiveness and consumer choice with the lie given to the very catchphrases that justified the privatization push in the first place. For example, Origin Energy took over Energy One customers, (Jack Green), without this going to tender, and have also purchased Integral Energy.
Consumers should be angry, but what should they do? Firstly, be informed and demand greater public consultation. The Electrical Regulation Act (2006) Chapter 3, Part 7, Subdivision 2, Paragraph 96 states: (1) The pricing entity, (Queensland Competition Authority), must … (c) Give the interim consultation notice to anyone the pricing entity reasonably believes will be interested in the issues. The QCA and therefore the Minister is clearly in breach of the Electricity Regulation Act. Secondly, actively lobby your local member to ensure input into equitable electricity pricing.
Join our online petition and have your voice heard.
http://www.gopetition.com/petition/43591.html
Thirdly, cast your vote thoughtfully at the next State Government election. Question public participation in decision-making and the value that has been placed on your quality of life and your livelihoods.
FURTHER INFORMATION: Roger Colclough, Dimbulah
Contact: 0740935379 rogerc@powert.com.au