In 2002, the South Australian government introduced sweeping reform in the electricity sector, allowing retailers to compete for customers. The basic idea was to give consumers a broader choice of electricity provider. The purpose of these reforms was to decrease prices through increased competition.
But 13 years later, these benefits have not been realised. According to the SA Council of Social Services, consumers have seen their electricity bills rise by $50 annually over the last five years, with utilities pocketing much of the extra cash as profits. In fact, according to analysis from Moody’s, high electricity prices in SA are negatively impacting not only households, but also manufacturing, mining and local farmers.
The result is that the region is lagging behind the rest of country economically. The Moody’s report found that high electricity prices were the primary contributor to these complaints. In 2014, the SA economy realised only 2.4% growth – versus 3.0% for the rest of the nation. To make matters worse, consumer spending and capital expenditures are also behind, further hurting South Australia’s economic prospects.
To deal with these challenges, the industry is expected to increase spending on the development of new capacity and infrastructure. For instance, SA Power Networks will spend $2.5 billion between 2015 and 2020 in new energy related infrastructure projects. However, this fails to address the near-term problem of skyrocketing electricity prices that are impacting the region.
But consumers are not passively waiting on the utility rates to become more affordable; they are taking matters into their own hands. Many have taken to installing solar panels and producing their own electricity instead – in fact, about 1 in 5 homes in the state already have a solar system installed.
In the future, more people will continue turn to solar power as a way to lower their consumption and electric bills. Interestingly, this means that households, driven by rising electricity prices, are leading the clean energy revolution in Australia – even without strong government policy to incentivise them to do so.
© 2015 Solar Choice Pty Ltd