Utilities' spending faces cuts

Electricity utilities will be forced to cut planned spending if it is unnecessary, with new controls to be introduced to challenge outlays in a further bid to rein in spending.

Electricity utilities will be forced to cut planned spending if it is unnecessary, with new controls to be introduced to challenge outlays in a further bid to rein in spending.

The so-called "gold-plating" of the electricity network has forced prices significantly higher over the past five years, resulting in a consumer backlash and a reduction in energy consumption.

Prices across the country have risen by more than 50 per cent.

To prevent electricity companies from unnecessary spending, which enables them to boost user charges even if the outlays have not been approved, a number of regulatory reforms are to be introduced which will give the authorities the power to force utilities to cut outlays.

"We will use benchmarking and other techniques to assess the need for and efficiency of spending proposals," said Andrew Reeves, the chairman of the Australian Energy Regulator.

NSW network companies have been criticised in the past for having higher costs than their Victorian counterparts, which are now in the process of being addressed.

Electricity distributors will be forced to introduce more efficient ways of providing services, as well as to ensure that customers benefit if spending is cut below planned levels, rather than the benefit flowing to the utilities.

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