Vested Interests Trying To Justify Electricity Profit At Our Expense
The status quo just won’t do – that’s the message from irrigators to the Australian Energy Council (AEC) as they seek to justify cosy regulatory arrangements that see their industry rake in monopoly profits.
National Irrigators’ Council CEO, Steve Whan said “a couple of weeks ago we released a report from Sapere Research group which showed networks earned more than $2.1 billion in excess profits.
“What we’ve seen since is attempts by industry, first with Energy Networks Australia, and now with AEC, to defend the status quo. A defence that risks the viability of Australian industry and jobs.
“In a fairly technical argument the AEC disputes and somewhat misrepresents our studyand then says the regulator uses actual returns in setting future allowed profits.
“But the regulator does notuse actual returns and that’s precisely our concern.
“NIC is not calling for cost of service regulation. We are simply asking that incentive regulation is done the way the AEC seems to think it is already being done.
“Unfortunately, the Energy Council seems to agree with the Networks who quite bizarrely tried to tell us last week that ‘higher profits = lower power bills…’.
They also seem to think overcharging is OK saying ‘the regulator uses the outcome to determine the resetting of the rate of return with profits returned to customers over the next five year period through setting lower benchmarks – which means lower network prices in the long term’.
“The Sapere report shows the method to set the rate of return used by the Australian Energy Regulator (AER) does not refer at all to actual returns. The AER’s Independent Panel Review of their Rate of Return Draft Guideline does not refer to network returns data. The data was not even published until after the Independent Panel had submitted its report.
“The fact that there is no error correction in the method setting the rate of return was also highlighted by the AER’s Consumer Reference Group in its submissions to the review.
“I find it odd that retailers are defending excess network profits. High power prices are forcing irrigators off the grid or out of production – that’s AEC members’ revenue. When power companies see customers installing diesel generators it should ring alarm bells.
“It should be telling AEC that defending the status quo is bad for our country and bad for their industry. We invite the energy industry to get on board with the Ag Energy Taskforce calling for a ceiling on prices of 16 cents per kwh.”
Media Contact:Steve Whan 0429 780 883
Tuesday 13 November 2018