High Voltage electric substation with transformers came at a huge cost
High Voltage electric substation with transformers came at a huge cost hxdyl

Calls for power bills to be slashed by 40%

QUEENSLAND electricity prices have to be slashed by 40% to avoid a death spiral that threatens the sustainability of big grid power, according to an industry expert and consumer advocate.


Hugh Grant, a former electricity industry executive, has produced an 150-page report which demonstrated state-owned electricity networks were making "ridiculous profits" and inflicting major damage in the process to Queensland communities and to industry competitiveness.

Mr Grant said what was effectively a super profit tax on electricity was driving away customers who now were exploring all options for energy independence.

As a consequence those still connected to the grid had to pay ever-increasing prices.

"They need to reduce prices by 40% to arrest the death spiral and protect the industry's ongoing viability,'' he said.

"The Queensland government will have to accept fair returns rather than extraordinary returns and it needs to be done as soon as possible.''

Investment incentive rules introduced in 2006 have led to asset gold plating with three quarters of Queensland's electricity network prices being driven by guaranteed returns on regulatory values Mr Grant and other advocates say have been set at artificially inflated levels.

Mr Grant's report outlines that unless those regulatory values are reduced in the order of 50%, the regulator is powerless to determine fair electricity prices.

He said the energy companies would still make reasonable profits with his proposed changes.

"It is clearly foolhardy and irresponsible to have the provision of Queensland's health and education services dependent on unsustainable profits from the electricity networks.

"Essential services shouldn't be funded by a super profits tax on electricity."

Crippling costs have seen the launch of ARC Up as a community advocate to protest what it describes as the "rip-off electricity prices in regional Queensland".

It's being driven by the Bundaberg Cane Irrigators, the Chamber of Commerce and Industry Queensland which says the small business tariff (Tariff 20) will increase by 11.2% in 2016-17 or by $235 annually while the seasonal time of use tariff (Tariff 22a) will jump 15.8% or by $660 a year.

ARC Up has launched a petition calling for at least a 33% cut in prices with spokesperson Debra Burden saying the State Government was using Ergon, Energex and Powerlink as cash cows.

Ms Burden said ARC Up's goal was to return Queensland to being the state with the cheapest power in Australia.

CCIQ senior policy adviser Kate Whittle says there were serious concerns about the impact of the price increases on small business profitability and competitiveness.

Dale Holliss, manager of the Bundaberg Regional Irrigators' Group, said five years of talking has delivered little.

"What we now know is that governments have the power to cut prices but hide behind acronyms in order to confuse and confound the public," he said.

"By playing us for fools the State Government is sitting on its hands as families, businesses and farmers lose everything due to electricity price gouging."

He said the Alliance of Electricity Consumers (AEC), in a report to the Queensland Parliament last year, had claimed household power bills had increased 300% between 2006/7 and 2015/16.

In the last financial year the government stripped $3.2 billion dollars in dividends from Ergon and PowerLink.

Queensland Treasurer Curtis Pitt announced in Townsville today Ergon and Energex would merge to form Energy Queensland.

"The simplicity of the company's name reflects the efficiencies we're looking to achieve here - by streamlining the companies to improve productiveness we will ultimately deliver power bill savings for customers over the longer term," Mr Pitt said.

"Removing duplication in areas like administration, shared services, boards, management and corporate costs we are creating a more efficient business and adopting industry best practice so that the available funds can be re-invested into better services for all Queenslanders, while retaining public ownership of the state's electricity assets.

"Rather than sell these assets to the private sector and watch power prices soar, the Palaszczuk Government is delivering on its election commitment to reduce costs and make these businesses work better for Queenslanders."

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