City costs drive up regional Queensland power prices

City costs drive up regional Queensland power prices
May 26 2017

City costs drive up regional Queensland power prices

CANEGROWERS is warning of an unfair electricity price hike imminent for regional Queensland.

When the Queensland Competition Authority (QCA) rules at the end of the month on regulated retail prices for regional Queensland for 2017-18, it is set to apply Energex’s costs of supplying power to the southeast corner into its calculations for Ergon, which supplies power to regional customers.

“Queenslanders who get their power from Ergon should be up in arms about this!” CANEGROWERS CEO Dan Galligan said. “It’s not just going to affect our sugarcane growing members and other farmers who irrigate – everyone in regional Queensland will feel the pain.

“The QCA indicated in its draft determination that prices will go 2% higher, meaning prices will have risen 123% over eight years continuing an injustice which is sucking the life out of Queensland’s regional economy.

“In calculating the underlying cost structure of providing power to regional Queensland, QCA has applied all of the Energex costs to the Ergon network, including the cost at which Energex purchases electricity from generators, the poles and wires (network) costs and an allowance for retail competition.”

Energex’s costs for buying power from generators to meet peak demands is much higher than Ergon’s because of the greater concentration of consumers, lower diversity of load and bigger, more frequent demand peaks.

“Customers in regional Queensland should not be asked to pay costs that they do not incur,” Mr Galligan said.

“Another clear difference is that Ergon does not need to be paid allowances to make room for retail competition in the price structure – because there is no retail competition in regional Queensland unlike in the southeast.

“There is no reason why regional electricity users should be saddled with southeast Queensland’s costs.

“The Queensland Government collects more than $1.3 billion dollars a year from electricity companies – stripping it straight out of the pockets of Queensland families and businesses into State Treasury.

“Consumers should pay no more than is necessary for the safe and reliable delivery of electricity. With costs continuing to escalate, business productivity is falling,” he said.

CANEGROWERS is calling on the QCA to take account of the prudential costs incurred by the Ergon network, not Energex’s, and Ergon’s lower retail costs when calculating its next round of regulated retail prices.