Electricity prices in regional Queensland

The Queensland Competition Authority (QCA) released today an issues paper seeking community views on options for setting regional electricity prices after 1 July 2015.

“If price monitoring is introduced in south east Queensland on 1 July 2015, the QCA will need a new approach to setting regulated electricity prices in regional Queensland,” said QCA chairman Malcolm Roberts.

“Changes may also be needed to the State Government’s uniform tariff policy which uses south east Queensland prices as the benchmark for setting prices across Queensland.

“The uniform tariff policy ensures that customers across Queensland pay the same regulated electricity prices.

“In most cases, the regulated price is based on the costs in south east Queensland of supplying electricity to customers. As costs in south east Queensland are at least 30 per cent lower than in regional areas, regional customers benefit from lower prices.

“The shortfall between the prices paid by regional customers and the actual costs of supplying them with power is funded by the taxpayer. In 2013–14, Ergon is expected to receive $615 million from the State Government to cover this under-recovery of costs,” said Malcolm Roberts.

The Government has asked the QCA for advice on the effectiveness of the uniform tariff policy and options that target support to areas of greatest need.

The Government is also seeking advice on ways to enhance retailer competition in regional Queensland.

“While the uniform tariff policy reduces prices for regional customers, it also discourages retail competition.

“Private sector retailers simply cannot compete with a subsidised government owned retailer.

“The State Government has indicated that transferring the subsidy from Ergon Retail to Ergon’s network business could eliminate this problem.

“The QCA will conduct a series of workshops across Queensland in February to discuss the issues raised in the paper as well as the recently released draft determination on electricity prices for 2014–15,” said Malcolm Roberts

Community consultation will commence early 2014, with submissions closing 28 February.

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