More big power bill shocks in pipeline
From The West Australian 26 Oct, 2011
WA households face a decade of electricity price rises at triple the rate of inflation as the State Government scrambles to keep up with the escalating cost of delivering power.
An analysis by _The West Australian _ reveals massive prices rises will be needed to keep abreast of the exploding cost of power production and distribution – which will be piled on top of the tariff jumps needed to close the gap between what is charged currently and the “cost-reflective” price.
With both sides of politics committed to ensuring prices cover costs, households are set for annual increases which dwarf the consumer price index, regardless of which party is in office.
The State Government said in Parliament last week that to end the annual subsidy by Treasury which keeps State-owned power businesses afloat, prices would need to rise immediately 28.8 per cent, adding $441 to an average bill.
But in a shock to households, power company executives told a parliamentary inquiry last week that their costs were going up more than expected.
Western Power managing director Doug Aberle said planned upgrades to the grid, which are yet to be ticked off, could translate into price rises of 6.4 per cent above what was budgeted next year, with additional rises of about 4 per cent for the ensuing four years.
Verve chief executive Shirley In’t Veld warned the rocketing cost of gas would drive production costs higher.
On top of these costs, the Government has committed to passing on the 7 per cent cost increase caused by the carbon tax and, under an order from Canberra, is obliged to generate more power from expensive renewable sources.
Bureaucrats at the utilities estimate the impact of higher generation and network costs, and the need to reduce the shortfall between what is charged and cost reflectivity, means prices will have to rise close to 10 per cent for 10 years.
Energy Minister Peter Collier would not be drawn on price rises but said modest rises would inevitably be followed by bigger jumps.