Energy Queensland forced to slash costs by $600 million
Source: Courier Mail, 24 July 2016
THE Palaszczuk Government’s power provider Energy Queensland will be forced to slash costs by more than $600 million a year, potentially imperilling hundreds of jobs.
The Sunday Mail can reveal that Energex and Ergon Energy had calculated before their recent merger that capital expenditure across the two companies would have to be cut by $3 billion over five years.
Operating costs would also need to be slashed following an Australian Energy Regulator decision last year that reined in the distributors’ demands to further push up power prices.
Energy Queensland will be forced to find the savings on top of the $560 million in forecast efficiencies from the creation of the company which the Palaszczuk Government plans to pocket.
A new energy services business that will compete with private electricians across the state will be spun from Energy Queensland in a bid to allay some of the cost cutting.
It remains unclear how many staff will be transferred to the new entity which has outraged electrical contractors.
In a written response to a Budget estimates hearing, Treasurer Curtis Pitt said Energex had estimated it would require a $2 billion capital cut and Ergon a $1 billion reduction over the five years to 2020 compared to the previous period.
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