Victorian electricity retailers' charges highest in Australia: report
An urgent review of the Victorian retail electricity market is needed with a report showing that retailers' charges in household electricity bills have risen more than 200 per cent in the past six years, says national welfare organisation the Brotherhood of St Laurence.
The report commissioned by the Brotherhood found that overall retailers' charges in Victorian electricity bills, which include metering, billing and marketing, rose by an average 212 per cent over six years, from a range of $86 to $183 in 2008 to a range of $371 to $471 in 2014.
John Thwaites, Chairperson of the Brotherhood's Energy, Equity and Climate Change program, said: "Victoria's retail electricity market is said to be highly competitive, which in theory should lead to lower prices for all households. In practice it hasn't. Our report reveals that retail charges for this essential utility have skyrocketed and are far higher in Victoria than in other states. "In fact, Victorians are now paying more for the retailer charges in their electricity bill than for the cost of generating electricity."
The price that households pay for electricity is made up of generator charges, transmission and distribution charges, retail charges and charges related to government policies. The generators produce the electricity and sell it to the market, distributors operate the "poles and wires" that transmit it, and retailers buy electricity from the market and sell it on to households and businesses.
Mr Thwaites said the report also analysed the fixed charges in electricity bills. "In Victoria fixed charges are 30 per cent to 40 per cent of the average annual bill of $1400 – and most of that is from the retailers. This is the highest proportion in Australia and higher than for household bills in other developed countries," he said.
Damian Sullivan, Senior Manager of the Brotherhood's program, said: "In particular this hits 'battler' households on low incomes, such as pensioners. The high fixed charges mean that these households, which generally use less electricity than high-income households, pay much higher average prices for their power. They also spend a bigger proportion of their weekly income on energy, and it's harder to find the money for electricity price rises when you are on a small household budget."
In another worrying trend, as electricity bills have risen so have disconnections. In Victoria they jumped more than five times over six years, from 6,249 in 2007-08 to 34,448 in 2013-14.
Mr Sullivan said the report showed that Victoria's fixed costs charged by the distributor companies are lower than other states, yet because of the high retail charges household bills have continued to increase.
Mr Thwaites said: "Based on this report and our concerns for vulnerable households, the Brotherhood of St Laurence calls for an urgent review of the Victorian retail electricity market and its impact on low-income households by the Victorian Government and the state's Essential Services Commission. The review should consider limits on the fixed charges that a retailer can impose."
The report, "A critique of the Victorian retail electricity market", was prepared for the Brotherhood by economics consultancy CME, which analysed Australian Bureau of Statistics data for total household electricity bills to estimate the amount retailers charge for their services.