Queensland Government vows to halt domestic electricity price rises for 12 months

The Queensland government, under the new Liberal Premier Cameron Newman, has vowed to put an end to electricity price hikes for 12 months, beginning 1 July 2012. The staying of the electricity price rises will apply to residences but not commercial premises. Additionally, a price rise of 7% is still expected due to the implementation of Australia’s carbon price legislation.

Newman’s decision, which will kill the state’s ‘inclining block tariff‘, comes after an unusually high number of household electricity service disconnections due to unpaid bills during the first quarter of 2012. The freeze will save households an average of $120 annually. While the price rise freeze is in place, the government will review the process for determining electricity rates. The new procedures resulting from the review will be implemented after the freeze is over. Electricity price rises in Queensland, as in most other Australian states, are determined by a governmental regulatory body (e.g. IPART in NSW or ESCOSA in South Australia). In Queensland, this body is the Queensland Competition Authority (QCA).

The government will also investigate how electricity distributors are being managed, with an eye to get to the bottom of how costs were being passed on to electricity end-users. This move appears to be an attempt by the government to shake up the entrenched electricity distributor/retailer infrastructure in order to foster greater competitiveness with the aim of slowing the rise of electricity prices. “I am keen to get into the nitty gritty of what is really driving these higher prices,” Newman said.

The quasi-governmental, vertically-integrated electricity supply chain model is seen seen as a barrier to the evolution of the grid to economically meet the electricity demand of the future, as well as a barrier to the uptake of renewable energy.

© 2012 Solar Choice Pty Ltd