Searching for a bright spark in the power debate

Dubious power bill comparisons, empty rhetoric and a sensationalist media are adding to confusion over household energy costs. An enlightened solution to the regulatory mess is in short supply.

It’s arguable that the biggest single problem with electricity supply in Australia at present is the way people talk about it.

Politicians on the make, regulators walking on eggshells, lobbyists of every hue, investors chasing a buck and journalists in need of a ‘wham, bam’ headline have spent 2013 giving us grievous bodily harm of the earhole on this issue.

Just as oils ain’t oils (if you remember the adverts), power bills differ according to where we live, how we live and how much dosh we have available at the end of the week or month for discretionary spending.

Cost comparisons are odiferous. Usage varies a lot. Householders are really only interested in the bottom line, rather than the make-up of the bill.

As an example, Melburnians consume about 30 per cent less electricity than Sydneysiders –because of the higher penetration and use of natural gas in Victoria – but they pay a higher annual network service charge south of the Murray. This can lead to a skewed view of costs if only energy charge comparisons are made.

Over the past seven years, percentage increases have differed a lot between states – they hit an eye-watering 22.6 per cent in Queensland for this financial year versus 1.7 per cent in New South Wales. The use of averages for the east coast and nationally is not meaningless, but it seldom jibes with what householders can see on their own bills.

National averages are not helped by the fact that politics in Western Australia is still keeping residential tariffs some 40 per cent below the cost to supply.

Allowing for all this, the Grattan Institute has calculated that the average annual household power bill across Australia is $1,660 in 2013 versus $890 in 2006.

To which a New South Wales average householder (assuming such a beast exists) will respond in anger: “I’m being done – my bills have risen from $1,030 to $2,300.”

The Australian Energy Market Commission is the entity stuck with advising the nation’s energy ministers on power and gas matters. The ministers form the Standing Council on Resources & Energy, which is part of the Council of Australian Governments.

That’s the Australian Energy Market Commission, the east coast market rule maker, not to be confused with the Australian Energy Regulator (the people who make decisions about network charges) or, in the case of New South Wales, the Independent Pricing & Regulatory Tribunal (the people who make decisions about regulated household costs, which apply to 40 per cent of the state’s residential consumers because the rest have contracts with retailers). Sorry, have I lost you?

The AEMC has just told SCER that Us Outdoors can look forward to a better time, power bill-wise, from 2012-13 to 2015-16 because the average national house bill is expected to rise by 1.2 per cent a year, which is less than the expected increase in inflation.

However, the Queensland Competition Authority has just announced that a “typical residential customer” will face a price hike of 13.6 per cent from July next year. If Tony Abbott has his way with the Senate and the carbon tax is removed, then the increase will be “only” 5.6 per cent.

For Queenslanders on regulated tariffs, electricity without the hated tax will be 31.8 cents a day cheaper if Abbott has his way.

With the tax gone, a Queenslander and his/her partner will each be able to enjoy an extra cappuccino or flat white a month on the savings.

“Go solar,” yodel the greenies and fellow travellers.

Well, for roughly one in four of households across the east coast, that’s not an option because they live in rented accommodation.

“Run free,” urge the energy retailers, their lobby groups, agencies like the AEMC and plenty of others – that is, sign an individual contract with a retailer and potentially save $250 to $400 a year.

The problem for roughly one in three of householders across the east coast is that the contracts could be written in Sanskrit, and many of them are fearful of getting trapped, like one can with a dodgy mobile phone deal.

We can veer off in to the no man’s land where ideologues argue endlessly about the real cost of the carbon tax, the renewable energy target and solar feed-in tariffs.  But your “typical residential customer” isn’t going to follow.

The simple message the customer hears is “you are being ripped off”. This triggers the well-documented reactions: the focus group out-takes and the political knee-jerking.

This is a mad, mad world. Somebody should do something about it.

Alexander the Great, confronted by some Middle East monkey business with the Gordian knot, sorted it by whipping out his sword and slashing through the damned thing.

What, one wonders, is the 21st century version to deal with the Gordian knot of power costs and power bills?

All one can safely say today is it ain’t anything that has been tried so far.

Keith Orchison, director of consultancy Coolibah Pty Ltd, publisher of the This is Power blog and editor of OnPower newsletter, was chief executive of two national energy associations from 1980 to 2003. he was made a member of the Order of Australia in 2004 for services to the energy industry.

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