Oakeshott backs ACCC calls for energy reform

Independent MP Rob Oakeshott has backed a call by the competition regulator to fix electricity network price regulation for the benefit of households and businesses.

The Australian and Competition Consumer Commission (ACCC) chairman Rod Sims says massive rises in electricity prices in the past five years are the result of a flawed set of industry rules.

He criticised state governments on Wednesday, especially NSW and Queensland, for contributing to the problem by imposing overly onerous higher reliability standards that had forced up prices.

Mr Sims also took a swipe at the industry rule maker, the Australian Energy Market Commission, for changing the rules in 2006 to make it harder for the regulator to keep prices down.

Energy suppliers had been allowed to review and generously cherry pick how they are regulated, leading to extra charges of $2 billion to NSW customers alone, the ACCC chief said.

Mr Sims told the Energy Users Association of Australia annual conference in Melbourne that the debate needed to focus on three main issues - changing the flawed regulatory rules, problems in the merits review process, and concerns over the costs imposed by higher standards to be met by network businesses.

Mr Oakeshott said he would attempt to put into effect Mr Sims' recommendation to fix the network price appeals process, or merits review, which had cost households and businesses.

He said the National Electricity Bill he will introduce to parliament on Monday would mean appeals must take account of price impacts, not just technicalities resulting in windfalls to monopoly owners.

"The only winner from one-sided appeals and spiralling network charges has been the NSW government," Mr Oakeshott said in a statement.

Mr Sims said the regulations aimed at higher standards of delivery had led to unnecessary spending on "pole and wires" to meet the standards.

State energy ministers in NSW, Queensland and Victoria have called for the Australian Energy Regulator (AER) to be split from the ACCC and reformed, saying it had failed consumers.

Mr Sims said the debate meant the regulator's independence was being hamstrung through no fault of its own.

"To effectively implement the changes required to fix the unnecessary electricity price drivers, we need an AER that believes in the changes to be made and is committed to making them happen," he said.

"Put another way, there is a simple logic to be applied here. If the three issues driving the unnecessary price increases are properly understood, how can anyone blame the AER for high electricity prices?"

Climate Change Minister Greg Combet said the government would take account of Mr Sims' comments about changing rules.

"But this is a matter that the states need to be engaged in," he told ABC television.

"Essentially the electricity systems are still very state-based. There are state regulators in each jurisdiction and there are a lot of improvements to be made."

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