Get ready for a shock in the mail: Spike in power prices
PREPARE yourself for a shock when you open your next power bill because rocketing prices show no signs of slowing down.
Prices are, on average, are likely to lift by 15 per cent across the country in the September quarter, according to new Commonwealth Bank estimates.
The worrying stats also show the average power bill for CBA's customers jumped by 17.6 per cent compared to the previous quarter.
Rod Sims, boss of the nation's consumer watchdog, ACCC said the jump is a continuation of soaring prices for electricity and gas in the past 10 years.
"It's just been one hit after the other," he said. "The prices have been rising faster than inflation and we have similar graphs to Commonwealth's - which shows it's not slowing down."
So what has been driving prices through the roof?
Mr Sims said a number of factors have been pushing up bills over the last decade with network prices increasing them up by around 40 per cent.
Network costs are upgrades or maintenance to the "poles and wires" that deliver electricity to people's homes. Until recently companies did not have to be efficient with what upgrades they did and were able to pass on the costs on to customers.
However, Mr Sims said the latest surge is largely down to the closure of Northern Power Station in South Australia and the Hazelwood Power Station in Victoria.
"The shock we're seeing when people open their bills now is mainly because of the closure of these stations," Mr Sims said. "It has resulted in higher generation costs which account for around 20 per cent of power price rises."
Wholesale gas prices on the east coast have doubled recently and the ACCC has noted that this seems largely in response to the closure of the Hazelwood and Northern power stations.
The closures removed supply from the system but also decreased competition in Victoria and South Australia so generators can ask for high prices knowing that someone will pay these prices.
Green schemes have added around 15 per cent to costs, but a lack of competition among electricity retailers that sell power directly to consumers is also partly to blame for price rises, said Mr Sims.
Three players (Origin, AGL and Energy Australia) cover more than 70 per cent of customers.
In March, Treasurer, Scott Morrison, directed the ACCC to hold an inquiry into the supply of retail electricity and the competitiveness of retail electricity prices.
Yesterday, Senator Matt Canavan formally requested the competition watchdog to investigate whether Australia needs divestment power under the National Electricity Law.
"There is a case that some practices in the electricity sector are approaching a severe demonstration of anti-competitive conduct but we do not have the corresponding penalties that other countries do to deter such behaviour," Senator Canavan reportedly said.
Mr Sims said he did not want to comment Senator Canavan's letter as the inquiry is still ongoing.
However, he urged customers to take action.
"If you find that your bills are already high, call your provider and ask for a better deal and threaten to move your business elsewhere if they can't," he said. "If this is the first time you've done it, you could make big savings - some customers have shed between five and 10 per cent off their bills by doing this."