Power Cuts or Power Bill Cuts – Does it really come down to a choice?

Who do you believe – the energy regulator charged with putting the long-term interests of consumers first? Or the NSW ‘poles and wires’ companies which actually deliver the stuff? 

That’s essentially the argument behind a high stakes legal stoush which will determine the size of planned 5-12% reductions to your next electricity bills.

And it’s especially important for older Australians who generally face higher bills. They are at home more, spend a higher proportion of their income on electricity; and are hit harder by climbing supply charges.

But those big savings promised to consumers are now under threat as the poles and wires companies and the NSW state government which owns them launch legal appeals against planned price cuts due on July 1.

So the FiftyUp Club is going to launch an appeal of its own: from today we’re asking you, the members, to send us your views on the legal battle, and tell us how higher electricity costs have impacted on your wallet and way of life.

Click Here to have your say by answering a few questions and commenting in our FiftyUp Forum

Read on to see what’s at stake, send in your comments and ideas and we’ll package them up for the tribunal hearing the case to ensure your voice is heard.

THE FULL STORY

The Australian Energy Regulator (AER) has fixed a five-year pricing determination which cut the amounts the NSW state-owned poles and wires businesses could charge us by some $6 billion to 2019.

It adds up to big savings for the consumer of between $100 and $300 a year depending where you live. It is aimed to bring the costs of delivery to NSW households in line with those levied by the privately-owned networks in SA and Victoria. Presently they can be twice as much.

We’re told those networks are more efficient and employ less workers, delivering lower costs to consumers. Falling demand for electricity means there’s also less need to build expensive ‘gold plated’ networks.

It was the massive investment and poorly controlled spending in the high-tech and high-cost ‘poles and wires’, including pylons and transformers, which saw many bills blow out by more than 70% in the past five years.

Network costs can add up to almost 60% of some people’s energy bills especially if they live in the higher cost of service rural areas.

But the NSW government and their poles and wires companies have lodged appeals to the Australian Competition Tribunal, claiming the cuts to their revenue mean they can’t operate safely or reliably.

They are backed by the trade unions as 2,200 jobs are at stake. The network companies say they have already shaved more than $3 billion and 3000 jobs from their capital and operating programs.

They also claim the cuts mean they can’t manage vegetation growth in rural areas, which, as the 2009 Victorian bushfires demonstrated, can carry serious risks.

Their arguments may sound convincing but have drawn fire from numerous quarters.

The ALP says the AER’s decision is fair and the NSW Government only wants to increase the waning value of the networks – a large part of which are up for a $13 billion long-term lease.

Groups representing consumers, welfare and business have also attacked the appeal and the Public Interest Advocacy Centre has brought its own legal challenge arguing for even bigger spending cuts on the networks.

To have your say, help us put together a submission to the Competition Tribunal.  Spend a few minutes answering the snap poll above on how power prices have affected your life, and leave a comment in our forum below.

We will report back soon on the next steps and make sure the voice of FiftyUps is heard.

From Christopher Zinn & The FiftyUp Club Team

Useful Links:

Daily Telegraph, 21 May, 2105, "Networks NSW will appeal energy regulators decision to cut the price of power bills for consumers": www.dailytelegraph.com.au/news/nsw/networks-nsw-will-appeal-energy-regulators-decision-to-cut-the-price-of-power-bills-for-consumers/story-fni0cx12-1227363388780

Sydney Morning Herald, 21 May 2015, "Electricity price cuts, privatisation plans under threat as power networks set up fight with regulator": www.smh.com.au/business/electricity-price-cuts-privatisation-plans-under-threat-as-power-networks-set-up-fight-with-regulator-20150521-gh6meh.html

The Australian, 21 May, 2015, "NSW power networks to fight cuts in court": http://www.theaustralian.com.au/business/nsw-power-networks-to-fight-cuts-in-court/story-e6frg8zx-1227364313737