CCIQ calls for big solutions on electricity largely ignored by QPC

Wednesday 3 February, 2016 | By: Darrell Giles | Tags: electricity prices, Productivity Commission, Asset Sales;

The Chamber of Commerce and Industry Queensland (CCIQ) believes a new report on electricity pricing is not bold enough to achieve real price savings for small business energy consumers. 

CCIQ Director of Advocacy Nick Behrens said the draft report, released today by the Queensland Productivity Commission (QPC), missed an opportunity to make a real difference for electricity pricing in Queensland.

“The recommendations are tempered bordering on being timid,” he said.

Mr Behrens said CCIQ hoped the draft recommendations would be strengthened by the final report on May 31 to make a real impact for small business.

“Electricity price rises since 2007 have taken a toll on small businesses, with an effective doubling in prices across this period,” he said.

“This is turn impacts on Queensland’s economy as increases in the price of power escalate the cost of doing business and the cost of all goods and services in Queensland.”

Mr Behrens said CCIQ made significant recommendations to the QPC through its submission on the issues paper for electricity pricing, which would have made a big difference for consumers.

They included:

Distribution Revenue Determination Outcome: CCIQ recommends that more efficiencies can be found across network businesses through the AER’s revenue determination process to achieve lower electricity prices for Queensland businesses.

Solar Bonus Scheme: CCIQ recommends that the Queensland Government seek to remove the legacy cost of the 44c Solar Bonus Scheme. CCIQ recommends that the State Government should not implement any future rebates to incentivise the uptake of solar.

Retail Price Deregulation in South East Queensland: CCIQ urges the State Government to proceed with market monitoring on 1 July 2016. The government should immediately confirm this outcome with consumers in February 2016.

Uniform Tariff Policy and Regional Competition: CCIQ supports retaining the Uniform Tariff Policy. CCIQ supports shifting the allocation of the Uniform Tariff Policy payments from Ergon Energy Retail to a network based Community Service Obligation. CCIQ supports the retention of the UTP on the basis of encouraging regional development and uniformity of operating costs for small businesses regardless of location.

Network Tariff Reform: CCIQ recommends that the network businesses focus on collecting more customer load profile data for small businesses as part of the network tariff reform process.

Reduced Demand: CCIQ recommends that the QPC investigate stranded assets and examine the overall value of the Regulatory Asset Base.

Asset Privatisation: CCIQ recommends the debate on asset ownership should be considered as part of the options presented to government to achieve reduced costs for Queensland small businesses.

Energy Company Merger: CCIQ recommends against the merger of generation companies Powerlink, CS Energy and Stanwell.

Mr Behrens said that, in response, QPC had recommended that:

  • The Queensland Government merge network businesses Energex and Ergon Energy;
  • The Queensland Government consider the merits of an earlier end to the Solar Bonus Scheme;
  • Deregulation of the SEQ retail electricity market should commence as planned on 1 July 2016;
  • The Queensland Government implement a network CSO to improve regional competition and that the government should not merge CS Energy and Stanwell.

“While the QPC report addresses a number of CCIQ’s recommendations, the elephant in the room is the absence of a real solution to reducing network prices,” he said.

“Network prices make up the largest proportion of a small business energy bill. CCIQ does not believe that the merger of Energex and Ergon Energy is enough to place downward pressure on prices.”

Mr Behrens said that as an independent advisory body, the QPC had the ability to deliver impartial and informed counsel.

“Primarily, the objective of the inquiry is to seek options that promote the long term interests of electricity consumers, place downward pressure on electricity prices and ensure a dynamic and responsive pricing framework,” he said.

“CCIQ does not believe that the recommendations presented by the QPC as they currently stand will achieve these objectives.

“CCIQ believes that the preliminary views delivered by the QPC are not reflective of the principles of effectiveness and independence.

“CCIQ suggests that the QPC reconsider the viewpoints put forward by the small business community in our submission on the issues paper.”

Mr Behrens said the report also remained silent on recommendations to investigate stranded assets and examine the overall value of the Regulatory Asset Base and asset privatisation.





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