Australians pay highest power prices: study

Updated

Australian households are paying among the highest electricity prices in the developed world according to research commissioned by the nation's top 100 power users.

A report released by the Energy Users Association of Australia (EUAA) shows average electricity prices have grown by as much as 40 per cent in the past five years.

It says prices are far above those paid in the United States, Canada, Japan and the European Union, and predicts prices will continue to rise significantly due to the introduction of the carbon tax and ongoing infrastructure costs.

The Federal Government acknowledges power prices are rising, but says it is helping with cost-of-living pressures.

Energy suppliers themselves say the drivers of these costs are structural and deregulation, and that greater competition is a crucial part of the answer.

Top of the list

The study involved a comparison of 91 countries, states or provinces in the developed world and found that household electricity prices in four Australian states were in the top six.

"Those four states collectively make up 75 per cent of the Australian population," said EUAA executive director Roman Domanski.

Those states in order are South Australia at number three, followed by New South Wales, Victoria and Western Australia.

In some cases, the average household electricity bill charged at just under 25 cents per kilowatt-hour in 2011-12 was 194 per cent more than that of Canadians, and 122 per cent higher than those of Americans.

Mr Domanski says the price disparity is only likely to grow.

"The three key factors that will increase prices again in 2012 are firstly the network charges - these are the charges for transporting electricity across poles and wires," he said.

"Secondly, the subsidies that are paid by people to support renewable energy.

"The third significant impact will be the introduction of a carbon price from July 1."

Households least able to afford the prices rises will be compensated.

But the EUAA says the price rises will still hurt and will negatively impact businesses.

"A lot of those companies are trying to compete on export markets," Mr Domanski said.

"If you force up the price of their electricity so that it becomes uncompetitive, that will have consequences in terms of jobs, investment, et cetera."

The Federal Government acknowledges electricity prices are likely to keep growing due to large amounts of investment required to maintain network infrastructure.

Both sides of politics are keen to mitigate against the extra pressure this places on the cost of living.

Prime Minister Julia Gillard says it is the Opposition that is driving up power prices by waging a campaign against the carbon tax.

"Uncertainty over carbon pricing. That is the reckless scare campaign from the Opposition with his (Tony Abbott's) futile promises to remove carbon pricing," she said.

But Opposition Leader Tony Abbott says it is the carbon tax itself which will push up electricity prices.

He says the EUAA study shows the carbon tax will add another 20 per cent to power costs.

"Why is the Government adding the world's biggest carbon tax to the world's highest electricity prices," he said.

White paper

The draft energy White Paper released in December predicted that as much $240 billion worth of investment would be needed to be spent on generation, transmission and distribution in the period to 2030.

And the Government has pledged to remove the impediments to attracting that sort of private capital including retail price regulation which is handled by the states.

Energy suppliers say the regulatory system is a big part of the problem.

But Matthew Warren, chief executive of the Energy Supply Association, which represents 38 electricity and natural gas companies, says managing high-peak demand is another.

"We run a network and a system to supply energy for just a few days a year, a few hours of those days a year," he said.

"That's incredibly expensive and easing those peak demands is going to be a crucial part of keeping costs down in the future."

The EUAA says that is an erroneous argument and that these companies have significant rates of return on their capital.

Its research shows that Texas, which has comparable high-peak demand, is among the lowest in the world in terms of cost.

"Overall energy demand in Australia has eased recently, peak demand has continued to rise, and that's the way we live our lives, that's the way energy is consumed in Australia," Mr Warren said.

"Just riding further peak demand upwards is going to put material increases on the cost of delivering energy in Australia and we think there's a smarter way."

A move to deregulation of the energy sector, a politically tricky solution in some cases, will be revived again in the final Energy White Paper due out later this year.

Topics: electricity-energy-and-utilities, australia, sa, wa, nsw, vic

First posted