Bills

clean energy schemes not to blame for soaring electricity costs

THE nation’s top competition guardian today cleared clean energy schemes of the major blame for soaring electricity costs.

More than 60 per cent of price jumps which are angering households and businesses came from rises in network prices and retail margins rather than subsidies for environmental schemes such as solar energy.

But Australian Competition and Consumer Commission chairman Rod Simms had no reprieve for governments which he said had to intervene more in the power industry market.

And he told gas producers they had a “social responsibility” to better serve the domestic market, warning they might otherwise look like banks which unfairly evicted farmers.

Mr Simms told the National Press Club in Canberra that of electricity price increases, over 40 per cent was due to rises in network charges, 24 per cent in higher retail margins, and 19 per cent in bigger generation costs.

He said 16 per cent came from “green costs”.

“Over 40 per cent of the increase is due to network costs, nothing to do — absolutely nothing to do — with renewable energy,” said Mr Simms.

“I don’t think the retail costs and margins have anything to do with renewable energy either.”

However, he acknowledged some green schemes were too generous when they began and have since been wound back.

But not before the costs have been “smeared across all electricity users”.

“What I was slamming, to use your terms, was the very high feed-in tariffs when the schemes kicked off,” he said.

“And I think anybody observing the electricity market, who understood the electricity market … could not have believed how generous those subsidies were and we are paying for them.

“The Governments have worked out they are too generous and have cut them back.”

Mr Simms is heading an 12-month ACCC inquiry into the power industry eight months to go.

He said government had to overcome their “pro-market inclinations” and intervene more in the power industry to get better outcomes for consumers.

He applauded the Federal Government’s bid to the Government is trying to get people off the worst contracts with electricity suppliers and confirmed the ACCC would monitor the response of retailers.

Mr Simms said greater transparency was needed in the dealings with consumers.

“I think just shining a light on whether they do it or not will go a long way,” he told the NPC.

“What are they doing? Is it having that affect? I think that will help a lot, just transparency.

“We are going to be looking carefully at what else

you can do in the market, for example to reduce switching costs.

“At the moment, you can’t take a low income person, including someone on a hardship program, and put them on a lower offer. “

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