Power bills may rise by at least 10% from July

Archived News, Posted on 07 May 2010

QUEENSLAND homeowners should brace for a double digit percentage increase on their power bills from July following official approval of massive spending programs for Energex and Ergon.

The Australian Energy Regulator yesterday signed off on nearly $12 billion in capital works plans for the two state-owned companies over the next five years, a figure that includes estimates for inflation.

Energex will spend nearly 60 per cent more than in the past five years and Ergon more than 40 per cent.

This translates into an increase of about $129 for a typical $1400-a-year residential electricity bill in the new billing year beginning in July and about $35 a year in the following years. But distribution costs make up only 40 per cent of Queensland electricity bills.

"It should be noted that factors other than distribution charges will cause retail prices to vary including, for example, factors including wholesale electricity prices," the AER said in its ruling yesterday.

Homeowners will have to wait until the end of the month to find out how much their total bills are about to rise.

That's when the Queensland Competition Authority must deliver its final ruling on the maximum allowable price increase from July 1.

The QCA, in December last year, issued a draft proposal for a 13.83 per cent increase which was challenged by the State Government.

"I am concerned about the assumptions being used within the QCA draft determination," Energy Minister Stephen Robertson said at the time.

However, with no sign the Government has won its argument, yesterday's AER ruling suggests the final price jump will be at, or even above, the QCA's initial proposal.

That would point to an increase of about $200 a year for an average bill and follows increases of 11.37 per cent, 9.06 per cent and 11.82 per cent in the three years since the 2007 deregulation of Queensland's retail electricity market.

It would also mean a more than 50 per cent increase in power prices in only four years.

The next round of price hikes could have been even higher if the AER had accepted the full capital spending plans put forward by the distributors.

"The AER has substantially reduced the expenditure proposed by Ergon Energy to ensure that only prudent and efficient costs would be recovered by customers," AER chairman Steve Edwell said.