By Julian Bajkowski
Energy suppliers have accused state governments across Australia of failing to execute key electricity market reforms which they claim are essential to rein-in soaring prices for consumers and businesses.
The peak industry group the Energy Supply Association of Australia has launched a stinging report card on the performance of individual states’ electricity reforms on the back of the Council of Australian Governments (COAG) meeting on Friday that produced another round of verbal jousting over who is to blame for power prices rising.
The industry scorecard has effectively failed three states – Queensland, Western Australia and Tasmania – for their slow market reform efforts. New South Wales and South Australia barely passed, while Victoria scored the highest.
The scores are intended to reflect performance against “a set of policy criteria within the responsibilities of state government,” ESAA said in its report.
A mix of public and privately owned retailers and distributors, the supplier group is pushing state and federal jurisdictions to deliver market reforms that will uncouple existing state-imposed price control regulations in favour of a more liberalised market structure with greater competition.
“Recent experience in a number of Australian states reminds us that heavily regulated markets resulting from short-term political interference do not ultimately deliver good outcomes for consumers,” ESAA said.
“Giving consumers more control over their power bills, enabling them to negotiate favourable deals with energy retailers, and giving them access to technologies that help manage energy demand will all contribute to reducing the cost of energy and increasing the efficient operation of the system.”
Variable pricing around peak load times remains a core battleground for the group, particularly the rollout of so-called smart meters to homes and businesses.
The devices are seen as essential because they can tell suppliers when and how much power is consumed and then bill customers accordingly.
Suppliers prefer smart meters because they allow more granular price signals to be sent to the market, especially around times of peak demand.
Being able to influence peaks and troughs in demand is highly advantageous for suppliers. Not only are they able to run more efficiently, they can also extract the best prices possible for those prepared to pay a premium while providing discounts as rewards to those prepared to consume off-peak power.
While smart meters have been rolled out in Victoria (albeit with some difficulty) other states are yet to implement such measures.
“Victoria has been the national leader on energy market reforms for two decades and has the highest score with 15.5 out of 20. Notably, it has achieved this under both Coalition and Labor governments, demonstrating the benefits of a bipartisan approach to energy market reform,” ESAA said.
However the supplier group is far less enthusiastic on intervention by policymakers for election purposes, especially in Queensland.
“Rather than promoting competition and driving greater efficiencies within the sector, successive Queensland Governments have undermined earlier reforms with unhelpful political interference,” ESAA said.
“Most recently, to fulfil a short-sighted election promise, the Government froze the main residential electricity tariff (Tariff 11) at non-cost reflective levels in 2012-13. This type of politically motivated policymaking will not deliver long-term benefits to consumers and raises concerns about the Government's commitment to energy market reform.”
The individual scores out of 20 for the states were:
11.0 SOUTH AUSTRALIA
10.5 NEW SOUTH WALES
7.5 WESTERN AUSTRALIA
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