The Rant #11: Oh Little Electron, Why Art Thee So Costly?


It was presented with little or no fanfare, and left with barely a squeak from the media.  What was this fanfareless squeak you might ask?  It was the report prepared by CME for the Energy Users Association of Australia, entitled; ‘Electricity Prices in Australia: A Comparison’ (March 2012).  The document can be found at http://www.euaa.com.au/publications/papers/

And did this report further illuminate the issue of electricity costs in Australia you might ask?   And the answer is;  Yes it did!  Broadly, here’s what it said (the figures are from the report):

 Figure 1:  ‘There’s a trend in there, and some greed as well (I suspect)’!

Apparently, while there is a belief that Australian electricity prices are low, average household electricity prices in Australia have increased by more than 40% since 2007.

Projections by the Australian energy Markets Commission (AEMC) indicate that prices will rise by a further 30% by 2013/14.

If the price trending of Japan, the European Union (EU), the United States of America (USA), Canada and Australian prices increase as indicated then average Australian household electricity prices will be 30% higher than Japan’s, 60% higher than the EU’s, 160% higher than in the US and 250% higher than Canada’s.

Figure 2  ‘Anything you can charge, the Aussie’s can do better’!

These increases along with exchange rate variations have Australia with average household electricity prices higher than those in Japan, the EU, the USA and Canada.

However, changes in the exchange rate have had a less significant impact on household electricity costs than the rising prices.

Fig 3:  ‘Who wants to play ‘King of the Castle’?

There are only two countries who charge more for electricity than South Australia (SA), New South Wales (NSW), Victoria and Western Australia (WA) – Germany and Denmark.  These Australian states are third, fourth, fifth and sixth in the top of the heap stakes.  Some 85 countries, states or provinces charge less than these four states, and that includes Tasmania, Queensland and the Australian Capital Territory (ACT).

Tasmania comes in at 11th, Queensland 16th, the Northern Territory 21st and the ACT 29th out of of 91 countries, states and/or provinces.

Some 61 of the comparators in this study charge less for their electricity than does our lowest charger, the ACT.

Why is it that I get the very real feeling that Australians are being overcharged for their electricity?  And, that the rot set in when Australia started flogging off the silver (well electricity generators and networks really) to private enterprise?

Here’s a few questions that I’d like to see satisfactorily answered.

How come I wasn’t asked about my belief on low electricity prices in Australia.  I think they are usurious and a rort!

Why is it that in a country grossly obese with coal and gas reserves our electricity charges are so high?

Following on from that, why are our charges so high compared to the rest of the world?  Especially those countries with a paucity of energy reserves?

Why are our electricity charges rising so fast in comparison to elsewhere?  And why are they so grossly higher?  250% higher than Canada’s?  Surely you jest?

Why are there charging disparities across the States (particularly the Eastern ones) when we are supposed to have an integrated system?

Why is it that the ACT, sited within NSW, has charges that are nearly 10 cents pkwhr less than those in NSW?

Why is it that the baby states (Tasmania, the Northern Territory and the ACT) are able to charge less than NSW, Victoria, SA and WA?

Why are Queensland rates less than those of the other Eastern States?  And don’t tell me its because their electrons are warmer – I won’t believe you!  Although, when you look at the NT charges there might be a case for that argument.  Hmmm?  Ahh!  But not when you consider the ‘frosty’ ACT.

Is the market essentially a competitive one, like we are being told?  Or is this just more ‘bumf’ to assuage the suckers (er, punters)?

Just how much are the respective government’s skimming off the top of these charges?  I know that in NSW the government takes an equivalent to corporate tax by calling agencies a corporation, and then also takes ‘dividends’ as the ‘shareholder’.  This can be hundreds of millions of dollars per utility.  And how’s that for ‘double dipping’?

A couple of side question Oh NSW government!  Aren’t the people of NSW the ‘shareholders’, and shouldn’t they be getting the benefits you take by a reduction in their charges rather than you taking it?  As these are Government imposts could they be considered ‘dirty big taxes’?  As a great majority of the NSW populace aren’t aware of these hidden money grabs, isn’t that a bit dishonest?  If Governments didn’t take these imposts, might the services be able to use that money for infrastructure refurbishment rather than having to go to the market to borrow money for such undertakings?  Wouldn’t that save a lot of money in interest payments and also mean lower charges?  Just asking!

And finally.  With such high charges for electricity, doesn’t that make us less competitive?  Or is it that industry gets a better deal than the householder?  Mmmm?

Do I feel that Im being overcharged for the electricity I use?  Oh yes I do!  Would I be a supporter of an independent review into electricity pricing and charges – Ohh yes I would!

Postscript:  May I also respectfully suggest a title change for the EMC Report?  Possibly; ‘Electricity Prices in Australia:  An Embarrassment!’

And that’s my rant for today!

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About deknarf

Australian born and bred who has spent most of his working life in R&D and IP management with earlier forays in the newspaper industry and martial arts. Fortunate enough to be living in one of the best countries in the World, even though I might get grumpy with it from time to time.
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6 Responses to The Rant #11: Oh Little Electron, Why Art Thee So Costly?

  1. deknarf says:

    i’ve never believed the privatisation arguments. Can’t convince met that a properly run and management public service (not subject to financial levies by government) can’t run more efficiently and at lest cost.

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  2. Sax says:

    Greetings :i: decknarf :/i:
    I think you are correct, but have only merely touched on the main problem.
    For most states in this union, their electricity generation, and the income derived from it’s distribution, is the day to day saviour, for state government treasuries, that can’t for the life of them, learn how to balance their respective cheque books.

    For a prime example, as to how corrupt and misleading this whole carbon debate is/has become, one only has to look at Tasmania. Electricity generation down there, is derived from 80% hydro, with a small gas generation plant, in the north of the state, making up the remainder. Where is the carbon in this set up ? There is none.
    It’s all a con job !
    Tassy electricity rates, have risen nearly 40% over the last year, and doesn’t look that is going to slow down any time soon. The government down there cries poor, and blames the new Carbon Tax, when in reality, carbon has nothing to do with it. The carbon generation from power generation down there is minimal, so why the massive increases ?

    As most electricity is generated under the auspices of respective state governments, the income derived from it, is theirs. For individual state governments, starved for cash from a broke federal labour government, the carbon tax is like presenting them with all their christmasses at once ?

    Remember, Carbon is the MOST prevelent particle/atom on this entire planet. When we breath in O2, what do we expel, CO2. There’s the tip off. The only effective way to reduce carbon on this planet, is the massive reforestation of it. That is why we have the problem we have, or the one the respective egg heads foresee. Photosynthesis is the only way to effectively reverse this trend.

    Just a little common sense is required.
    A tough ask for the tossers in Canberra admittedly, but there it is.

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    • deknarf says:

      Thanks Sax, My addendum to my Rant indicated just how much the NSW Govt was raking in from electricity generation. So you are on the money. They are also doing the same thing with water — I should know I worked at Sydney Water for some 20 years. In reality they are a hidden tax on people!

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      • Sax says:

        Course it is !
        Speaking of water, here’s one for you ?

        Again, down south, there was a directive from Hobart, a few years ago, for local council/water boards, to go round to every farm, or such like, (any place that had their own bore or well, or dam etc, i.e. their own water supply), and on the entry to the house sheds etc, a new water meter was to be placed on that water supply, and a new “sustainability charge”, to be attached. In other words, council wanted to charge for water they had nothing to do with supplying, maintaining and the building of new infrastructure to provide it.

        The farmers threatened to nearly burn Hobart to the ground.
        The first trial meters met with mysterious system faults, and were ultimately shut down during those initial trial periods, funny that ?

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  3. deknarf says:

    Here’s an addendum to my Rant of yesterday, excerpts from Michael West’s article in the Sydney Morning Herald’s Business Day of 20 June, 2012. I don’t think I need to say anything further except ‘Uh huh!’
    “The Australian Energy Regulator (AER), the Australian Energy Markets Commission (AEMC) and the Independent Pricing and Regulatory Tribunal (IPART) have all suggested that rising prices are due to overspending on the part of the network providers.
    It is also likely that the government will exploit this surging capital expenditure, or “gold-plating” of the networks, as it fattens up its electricity cash-cow Transgrid for privatisation.
    A line item in last week’s NSW budget showed an increase of $250 million in dividends from the state’s electricity transmission and distribution businesses.
    This hefty 41 per cent increase in payments to Macquarie Street – up from $639 million to $901 million in only a year – comes at a time when electricity prices for consumers are spiralling, and ironically, when consumer demand is actually falling.
    This is a massive impost on households and on business, and will even act as a drag on the whole economy.
    So we have a situation where the more the network spends – it makes a regulated return – the higher its budget and the more revenue flows to government.
    The National Electricity Market, said Oakeshott, was the greatest market failure in Australia today, sending cost of living pressures through the roof. He has a point.”
    For more see:
    http://www.smh.com.au/business/the-real-culprits-behind-surging-power-bills-20120620-20njs.html

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    • Sax says:

      Interesting addendum chief, but hardly new ?
      After all, this was one of the original arguments against privatisation of the utility networks all those years ago. That being ? Multiplication of services.

      Instead of one maintenance section, we now have many.
      Instead of one computer/administration section, we now have many.
      Where is the competition ? There can’t be, as supply of all utilities from the main state governments is fixed, and the same to all. So just where are all these supposed new savings to consumers supposed to come from ? Fantasy land ?

      Back to electricity again, just to pose a parting thought ?
      When was the last time you saw a work crew out, on a Sunday, trimming tree limbs from power lines in your neighbourhood ? Hmm ?
      Twenty years ago, before this wonderful privatisation idea, every weekend ?
      Now ? Ash Wednesday ring a bell folks ?

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