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Tibor Majlath
Posted on 18 Aug 2018 10:20 am

We are sometimes reminded that network/service charges make up nearly 50% of an electricity bill. The total bill (electricity cost + service charge) attracts 10% tax as the Coalition's GST.

Back in January 2014 we saw that "HOUSEHOLDS are paying up to $550 a year for power before flicking on a switch. Efforts to save money by using less electricity are being thwarted by new price surges of up to 74 per cent for fixed supply charges, a Victorian energy cost investigation reveals. Companies are cranking fixed charges to compensate for falling electricity demand to protect revenue and profit margins."

The Australian Financial Review reported in 13 March 2017 that "Urgent action is needed to curb price gouging by electricity companies who are earning "excessive" profits, sometimes as high as 43 per cent of the total household electricity bill."

Just recently, 16 August 2018, Herald Sun, James Dowling reported that "The energy industry has hit back at Premier Daniel Andrews' (Victoria) claim privatisation has led to higher prices, saying that the sudden closure of power stations and absence of government policy is more to blame for higher bills."

First, they blamed Labor's Carbon Tax, then they blamed falling electricity demand and had to protect revenue and profit margins, then they blamed the $120/year/household cost of the Renewable Energy Target (RET), now they blame the sudden closure of coal-fired generators.

According to annual reports of the State Electricity Commission of Victoria (SECV) electricity prices were falling over the period 1948 to 1992 before privatisation. After privatisation 1992 and before the Carbon tax (2012) the price of 1 KWH increased by 80%. Service charges increased by 100% over the same period.

The Carbon tax applied to electricity used. It did NOT apply to the service charges. Nevertheless, service charges rose by 50% over the period 2012-2018 after the abolishing of the Carbon tax.

Perhaps the profit motive after privatisation of essential services is to blame for much of the gouging taking place. Privatising essential services puts the welfare of the nation at risk.

Hard to see prices coming down when energy suppliers facing falling electricity demand need to protect revenue and profit margins.

Prices did not fall $550 per year with the abolishing of the Carbon Tax. Let's hope they will fall the magic $550 / year as a result of the NEG.

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