Productivity Commission releases Draft Report on Electricity
In response to a dramatic increase in electricity prices over the last five years, the Productivity Commission has today released a draft of the report currently being undertaken into the network component of prices.
The document is expansive but T&O Consulting has highlighted the key points below.
- Rising prices are due to rising network costs. The PC states that while that some of this spend can be justified, it points out regulatory and network ‘inefficiencies’ that suggest other parts cannot.
- More focus must be placed on end-user, demand-side participation including the national roll-out of Smart Meters. This should be followed by time-of-use or dynamic pricing tariffs. This should result in a fairer distribution of costs to large users rather than spreading costs indiscriminately across all consumers in the form of rigid peak-only tariffs. According to the PC, this should see a reduction of between $100 and $250 per household.
- Reliability standards are restrictive and result in massive investment for little or any necessity. The PC states that a quarter of bills are paid to fund investment for a potential 40 hours of critical peak, either hot summers or cold winters where air-conditioners or heaters could consume large volumes of power from the NEM.
- The PC explicitly called for sluggish state-owned assets in QLD, NSW and Tasmania to be immediately privatized.
- The rate of return on investment in networks should be curtailed to circumvent over investment in infrastructure by profiteers.
Full the full draft report please follow this link.